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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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Last modified: March 27, 2008