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tributed to Evergreen Trading, LLC, the amount
treated as contributed by the partners under sec-
tion 722 of the Internal Revenue Code is reduced
by the amounts received by the contributing part-
ners from the contemporaneous sales of the call
option(s) to the same counter-party. Thus, the
basis of the contributed option(s) is reduced,
both in the hands of the contributing partners and
Evergreen Trading, LLC. Consequently, any corre-
sponding claimed increases in the outside basis in
Evergreen Trading, LLC resulting from the contri-
butions of the foreign currency option(s) are
disallowed.
8. It is determined that the adjusted bases of the
long call positions (purchased call options), zero
coupon notes, and other contributions purportedly
contributed by the partners to Evergreen Trading,
LLC has not been established under I.R.C. § 723.
It is consequently determined that the partners of
Evergreen Trading, LLC have not established ad-
justed bases in their respective partnership in-
terests in an amount greater that zero (-0-).
9. It is further determined that, in the case of a
sale, exchange, or liquidation of Evergreen Trad-
ing, LLC partners’ partnership interests, neither
the purported partnership nor its purported part-
ners have established that the bases of the part-
ners’ partnership interests were greater than zero
for purposes of determining gain or loss to such
partners from the sale, exchange, or liquidation
of such partnership interest.
10. Accuracy-Related Penalties
It is determined that the adjustments of partner-
ship items of Evergreen Trading, LLC are attribut-
able to a tax shelter for which no substantial
authority has been established for the position
taken, and for which there was no showing of rea-
sonable belief by the partnership or its partners
that the position taken was more likely than not
the correct treatment of the tax shelter and re-
lated transactions. In addition, all of the
underpayments of tax resulting from those adjust-
ments of partnership items are attributable to, at
a minimum, (1) substantial understatements of
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Last modified: November 10, 2007