Arlene Nussdorf, et al. - Page 6




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          following adjustments:                                                      
               1.   It is determined that neither Evergreen Trading,                  
                    LLC nor its purported partners have established                   
                    the existence of Evergreen Trading, LLC as part-                  
                    nership as a matter of fact.                                      
               2.   Even if Evergreen Trading, LLC existed as a part-                 
                    nership, the purported partnership was formed and                 
                    availed of solely for purposes of tax avoidance by                
                    artificially overstating basis in the partnership                 
                    interests of its purported partners.  The forma-                  
                    tion of Evergreen Trading, LLC, the acquisition of                
                    any interest in the purported partnership by the                  
                    purported partner, the purchase of offsetting                     
                    options, the transfer of offsetting options to a                  
                    partnership in return for a partnership interest,                 
                    the purchase of assets by the partnership, and the                
                    distribution of those assets to the purported                     
                    partners in complete liquidation of the partner-                  
                    ship interests, and the subsequent sale of those                  
                    assets to generate at a loss, all within a period                 
                    of less than six months, had no business purpose                  
                    other than tax avoidance, lacked economic sub-                    
                    stance, and, in fact and substance, constitutes an                
                    economic sham for federal income tax purposes.                    
                    Accordingly, the partnership and the transactions                 
                    described above shall be disregarded in full and                  
                    any purported losses resulting from these transac-                
                    tions are not allowable as deductions are not                     
                    allowed for federal income tax purposes.                          
               3.   It is determined that Evergreen Trading, LLC was a                
                    sham, lacked economic substance and, under §                      
                    1.701-2 of the Income Tax Regulations, was formed                 
                    and availed of in connection with a transaction or                
                    transactions in taxable year 1999, a principal                    
                    purpose of which was to reduce substantially the                  
                    present value of its partners’ aggregate federal                  
                    tax liability in a manner that is inconsistent                    
                    with the intent of Subchapter K of the Internal                   
                    Revenue Code.  It is consequently determined that:                
                           a. the Evergreen Trading, LLC is disre-                    
                              garded and that all transactions engaged                
                              in by the purported partnership are                     
                              treated as engaged in directly by its                   
                              purported partners.  This includes the                  






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