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undertaken to accomplish it are chosen for their tax advantage.
On the facts before us, we conclude that the answer is yes.
d. Conclusion
Respondent’s proposed adjustment may not be sustained, and
the application of sections 731(a)(1) and 752 may not be
rejected, on the ground that the liquidating distribution lacked
economic substance.
C. Marketability of the AIG Notes
1. Introduction
As noted supra, participating partner has submitted two
affidavits in support of his position that the AIG notes were not
“marketable securities” within the meaning of section 731(c)(2).
The first is the Nanberg affidavit, in which Mr. Nanberg, a
registered investment adviser, concludes that the AIG notes “were
not listed or traded on an established financial market and no
such market existed for the * * * Notes on December 26, 2000, or
at any time thereafter.” On that basis, participating partner
argues that the AIG notes do not constitute “marketable
securities” under the general definition of that term in section
731(c)(2)(A). The second affidavit is the Ross affidavit, which
was submitted in response to respondent’s argument that an issue
of fact exists as to whether the AIG notes constituted marketable
securities under section 731(c)(2)(B)(ii). That section provides
that the term “marketable securities” includes any financial
instrument that “pursuant to its terms or any other arrangement,
is readily convertible into, or exchangeable for, money or
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Last modified: March 27, 2008