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marketable securities”. In his affidavit, Mr. Ross states that
all of the relevant terms of the transaction in which MP acquired
the AIG notes are contained in the notes themselves or in related
documentation (which is attached to the affidavit), and that no
“agreement, understanding, or arrangement” existed that would
have modified the terms of the referenced documentation.
Respondent “agrees and would stipulate that the [AIG] Notes
* * * were not traded on an established securities market.” We
interpret that statement as respondent’s concession that the AIG
notes did not constitute marketable securities on the ground that
they were “actively traded (within the meaning of section
1092(d)(1)).” See sec. 731(c)(2)(A); sec. 1.1092(d)-1(a), Income
Tax Regs. Therefore, the issue regarding the marketability of
the AIG notes is whether, pursuant to any term of those notes (or
the related documentation) or any “arrangement” between MP and
CB&T, those notes were readily convertible into money or
marketable securities, thereby causing the notes to be
“marketable securities” under section 731(c)(2)(B)(ii).
2. Written Terms and Conditions of the AIG Notes
During the hearing, respondent’s counsel argued that there
is a factual issue regarding the marketability of the AIG notes
because (1) under paragraph 11(a) and (b) of the “further
provisions”, the notes are renegotiable upon the agreement of all
holders and (2) there is only one holder (MP or, for purposes of
the motion, Countryside), so unanimous agreement “shouldn’t be
too much of a problem”. Respondent’s counsel was referring
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Last modified: March 27, 2008