United States' Motion to Exclude Expert Testimony of Plaintiffs'

In particular, it is my understanding that the overall transaction and the neteffect of the swaps had a significant business purpose, namely the potential acquisitionof Solution 6 and the hedging of a portion of the related currency risk. Moreover, it ismy understanding that there was a significant likelihood that the transaction wouldproduce a pre-tax profit after subtracting all transactions costs, including the costs ofthe Opinion. With both a business purpose and a potential pre-tax profit, even the mostconservative tax advisors would likely conclude that there was a more likely than notchance that the economic substance doctrine, (or related doctrines such as the shamtransaction doctrine), would not apply. The Opinion analyzes the case law consistentwith this view and comes to the same conclusion.A notable aspect of this transaction is that it was entered into after Notice 2000-44was issued. An important element of the Opinion, therefore, is how it dealt with thisNotice. I believe that the Opinion dealt with the Notice reasonably. The approach ittook was to examine the legal theory and authorities relied on in the Notice anddetermine whether those theories and authorities applied to the transaction at issue.This is appropriate because a Notice is simply a statement of the government's views ofa particular transaction and carries no weight (as to the substantive tax treatment of thetransactions - Notices can have procedural effects such as making a transaction a listedtransaction). The analysis of the legal theories and authorities is reasonable. Inparticular, the transaction here had an opportunity for profit and a business purpose,making the application of the economic substance doctrine, the partnership anti-abuserule, or similar doctrines relied on by the Notice unlikely.It is therefore, my opinion that the Opinion is consistent with the type andquality of tax advice normally given for complex transactions. Most experts in tax lawwould likely accept this opinion as reasonable. A taxpayer exercising ordinary carewho is not an expert in tax law would have no basis for questioning the Opinion andwould reasonably rely on it in filng tax returns.c. IRS Standards of Tax PracticeThe IRS regulates tax practitioners through Circular 230, which sets outstandards of tax practice separate from the state law standards of care for attorneys oraccountants and separate from the standards imposed by the penalty rules. The12