Countryside Limited Partnership, CLP Holdings, Inc., Tax Matters Partner - Page 32




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          constituted marketable securities as defined in section 731(c)(2)           
          or, alternatively, that, even if they were nonmarketable, the               
          lack of economic substance surrounding their purchase and                   
          distribution negates the ability of Mr. Winn and Mr. Curtis to              
          achieve nonrecognition of gain under sections 731(a)(1) and                 
          752(a) and (b).18  That alternative argument (lack of economic              
          substance) is reiterated by respondent in opposing the motion.              
          We will first address what we consider to be respondent’s                   
          alternative argument that, even if the AIG notes constituted                
          nonmarketable securities, the liquidating distribution must be              
          considered, in substance, a distribution of cash to Mr. Winn and            
          Mr. Curtis resulting in their recognition of gain.                          
                    2.  Application of Goldstein v. Commissioner                      
               Respondent seeks to disregard the CB&T loans and the                   
          purchase and (because CLPP and MP are to be disregarded for                 
          purposes of the motion) deemed distribution of the AIG notes                
          directly to Mr. Winn and Mr. Curtis.  In support of that                    
          position, respondent points to the interest detriment, which,               
          combined with transaction costs, necessarily resulted in an                 
          arrangement that could not generate a profit to Countryside, and            
          which, therefore, was without business purpose.  The principal              
          authority upon which respondent relies is Goldstein v.                      

               18  At this point, we use the term “economic substance”                
          without attaching to it a precise meaning but only to encompass             
          the various grounds advanced by respondent for disregarding the             
          tax results claimed by participating partner, e.g., lack of                 
          “business purpose or economic effect”, a “series of transactions            
          * * * [amounting to] a sham”, a “transaction * * * [that] makes             
          no economic sense”.                                                         





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