United States' Motion to Exclude Expert Testimony of Plaintiffs'

Beal and Thomas Montgomery stated that there were substantialnon-tax purposes for all of the aspects of the BPB Transactions.Ei ther of these two differe ces standing alone defeats any claimthat, as a matter of fact, the BPB Transactions aresubstantially similar to a otice 2000-44 transaction. Idiscuss each of the differe ces in turn.THE PLAINTIFFS' NET ECONOMIC OUTLAY WAS NOT "NOMINAL OR ZERO"Notice 2000-44 describ s the basic facts of the offsettingoptions variationsummarized above -- and then explains theposition advanced bythis transaction. Therelevant passage reads in f 11 as follows:In (the offsettin options J variation, ataxpayer purchase and writes options andpurports to creat substantial posi ti vebasis in a partnership interest bytransferring thos option positions to apartnership. For example, a taxpayer mightpurchase call opt' ons for a cost of $1,OOOXand simultaneousl write offsetting calloptions, with a sightly higher strike pricebut the same expi ation date, for a premiumof slightly less han $1,000X. Those optionposi tions are the trans ferred to apartnership which, using additional amountscontributed to th partnership, may engagein investment act' vi ties.Under the posi tio advanced by the promotersof this arrangeme t, the taxpayer claimsthat the basis in the taxpayer's partnershipinterest is incre sed by the cost of thepurchased call op ions but is not reducedunder §752 as a r sul t of the partnership'sassumption of the taxpayer's obligation withrespect to the wr' tten call options.- 16 -