Countryside Limited Partnership, CLP Holdings, Inc., Tax Matters Partner - Page 30




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          argue that there exists an issue as to the existence of a                   
          predominant tax avoidance motive.                                           
               In support of that argument, respondent notes that, in two             
          complaints filed in the Court of Federal Claims on behalf of CLPP           
          and MP, respectively, it is alleged that both CLPP and MP and the           
          transactions in which they engaged “had economic substance and              
          business purpose and did not have a principal purpose to reduce             
          substantially the present value of * * * [Countryside’s]                    
          partners’ aggregate tax liabilities in a manner inconsistent with           
          the intent of subchapter K.”17  We also note that, in a case in             
          this Court involving Countryside’s 2001 taxable year, Countryside           
          Ltd. Pship. v. Commissioner, docket No. 22023-05 (docket No.                
          22023-05), respondent denies Countryside’s $11,450,498 basis                
          step-up for the Manchester property, pursuant to section                    
          734(b)(1)(B), which results in his increasing Countryside’s gain            
          on its 2001 sale of that property by like amount.  Respondent’s             
          position in docket No. 22023-05 is premised, in part, upon his              
          disregard, for Federal income tax purposes, of CLPP, which had              
          made a section 754 election, and the failure of MP to make such             
          an election.  See sec. 734(b) (last sentence).  In defending the            
          basis step-up and resulting smaller gain on the sale of the                 
          Manchester property, petitioner in docket No. 22023-05 alleges              
          that the FPAA “arbitrarily and erroneously determines that the              


               17  Both of those complaints involve challenges to                     
          respondent’s adjustments to (1) the bases of the members in CLPP            
          for their membership interests therein and (2) MP’s bases for its           
          assets.                                                                     





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