- 4 - 2. It is further determined that the loss deduction claimed on your 2001 federal income tax return is disallowed because Alameda Investments, LLC with reference to which you determined basis in the derivative security sold is a sham and should not be recognized for federal income tax purposes. 3. It is further determined that the deduction of $1,657,609 claimed as a loss for the tax year 2001 is disallowed because you have failed to establish the basis in the partnership interest in Alameda Investments, LLC was greater than zero. You have also failed to establish the basis in the derivative securities sold or disposed of was greater than zero ($0). 4. It is further determined that the deduction for the loss claimed is disallowed to the extent that the provisions of Chapter 1, Subchapter K of the Internal Revenue Code were used to calculate basis in the Property sold. Alameda Investments, LLC was formed or availed of in connection with a transaction or transactions in taxable year 2001 a principal purpose of which was to reduce substantially the present value of your federal tax liability in a manner that is inconsistent with the intent of Subchapter K of the Internal Revenue Code. The manner in which you and Alameda Investments, LLC accounted for the derivative securities transaction in question violated the intent of Subchapter K. Accordingly, the parties’ accounting for the transaction should be adjusted, pursuant to the authority contained in Treas. Reg. § 1.701-2, to achieve results that are consistent with the intent of Subchapter K by ignoring the existence of the partnership, or treating transactions purportedly engaged in by the partnership as engaged in directly by the purported partners. 5. It is further determined, in the alternative, that the loss claimed on your 2001 federal income tax return should be decreased to reflect the limitation on your adjusted basis in your partnership interest resulting from your contribution of your position(s) in the securities transaction(s) to the partnership, pursuant to Treas. Reg. § 1.752-6T. 6. It is further determined, in the alternative, that the loss claimed on your 2001 federal income tax return shouldPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 NextLast modified: November 10, 2007