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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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