United States' Motion to Exclude Expert Testimony of Plaintiffs'

irelationship cannot be eva~uated if the rest of the propertyiIcontributed to the partner~hip is disregarded.iITo take one prominent lexample, consider Treasury regulation§1.752-6. Assuming this rdgulation is valid and that it appliesiito BPB's contribution of t~e swaps to Bemont (on which I expressno opinion), it requires BBB to reduce its outside basis in,Bemont by the value of the ishort swaps at the time of theiricontribution, subj ect to t~o possible exceptions. One exceptionapplies if "the trade or b~siness with which the liability isassocia ted is trans ferred ~o the person assuming the liabilityas part of the exchange." IIRC §358 (h) (2) (A); Reg. §1. 752-,6 (b) (1). The other except~on applies if "substantially all ofthe assets with which the ~iabili ty is associated aretrans ferred" as part of th~ same transaction. IRC§358(h) (2) (B); Reg. §1.75~-6(b) (1). This second exception doesnot apply to transactions ~he same as or substantially similarito the transactions descri~ed in Notice 2000-44. §1.752-6 (b) (2) .Treasury has explaineq that the first exception, the onewhen a trade or business is transferred together with aicontingent obligation, is ~ecessary so that Reg. §1. 752-6 doesnot impede the contributio~ of assets and obligations "topartnerships for substanti~l business purposes." Preamble toProp. Reg. §1.752-7, 68 Fed. Reg. 37434 (June 24, 2003). In- 20 -