-307-
For the reasons discussed in great detail in this opinion,
Mr. Levinton’s assumptions about Generale Bank’s and CLIS’s
intentions to partner in a film venture with the Ackerman group
are erroneous and contrary to what we have found to be Mr.
Lerner’s understanding of the CDR transaction. Consequently, we
cannot agree that Mr. Lerner reasonably relied on Mr. Levinton’s
memorandum in filing SMP’s 1997 partnership tax return.
7. Opinion From Chamberlain Hrdlicka
In 1998, Mr. Lerner sought and received the advice of
Chamberlain, Hrdlicka, White, Williams & Martin (Chamberlain
Hrdlicka) concerning the tax issues regarding SMP. Joseph R.
Valentino of Chamberlain Hrdlicka prepared a memorandum to Mr.
Lerner dated December 11, 1998, regarding the adjusted basis for
Federal income tax purposes that SMP had in the SMHC receivables
and stock.
The Chamberlain Hrdlicka memorandum consists of 19 pages.
Eleven of the 19 pages are dedicated to a statement of facts.
212(...continued)
Affiliated Cos. v. Commissioner, 90 T.C. 171 (1988). Mr.
Levinton posited that “the pivotal factual issue that makes
Esmark persuasive, if not controlling, is that GB and CLIS
entered the LLC with the intention of remaining participants in
it, and with no immediate intention to sell to Rockport or anyone
else”. Mr. Levinton cautioned, however, that the Generale Bank’s
and CLIS’s contributions to SMP in exchange for preferred
interests might be viewed as a meaningless step under Esmark, if
neither Generale Bank nor CLIS ever intended to become members of
SMP and did so only as an intermediate and meaningless step in
disposing of the stock and receivables.
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