Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 261

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          tax benefits from the transaction with a potential value in the             
          hundreds of million of dollars, it is very unlikely that the                
          $10,000,000 figure represents the fair market value of the debt.”           
          Mr. Shapiro’s expert report provides no basis for reaching these            
          conclusions other than speculation.  He did not identify the tax            
          benefits that he alluded to and, indeed, testified that he based            
          his conclusions on a discussion with respondent’s counsel                   
          regarding SMP’s “trying to take a writeoff on this debt”.                   
          Similar to other portions of Mr. Shapiro’s report, these                    
          statements have the distinct quality of advocacy.                           
               For the reasons stated above, we conclude that Mr. Shapiro’s           
          expert report and testimony are not admissible into evidence.  We           
          shall grant petitioner’s motion in limine as it relates to that             
          expert report and testimony.                                                
               B.  Mr. Jouannet’s Response                                            
               At trial, we admitted a letter from Mr. Lerner dated                   
          November 21, 1997, requesting a confirmation from Mr. Jouannet:             
               In order to respond to a question asked by our                         
               auditors, we would appreciate receiving a letter from                  
               you confirming that, to the best of your recollection:                 
               (i) when GB and CLIS entered into the Santa Monica                     
               Pictures LLC agreement, they intended at the time to be                
               partners with Rockport Capital Inc. and (ii) their                     
               decision to dispose of their interests was made                        
               subsequent to the date of that agreement (December 11,                 
               1996).  I recall that the interests were transferred at                
               the end of 1996.                                                       








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