United States' Motion to Exclude Expert Testimony of Plaintiffs'

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icrafting this regulation, I~S and Treasury recognized that ifthe taxpayer is trans ferring a trade or business to apartnership together with a~sociated contingent obligations, thetransaction by definition cannot be the same as or substantiallysimilar to the transactions ¡described in Notice 2000-44, becauseNotice 2000-44 describes ta~-motivated transactions that lackany signi ficant business dimension other than tax minimization.Thus a carve out from the t~ade or business exception for Notice2000-44 transactions was un~ecessary.To be clear:I am not! suggesting that Beal or BPBcontributed a trade or busi~ess to Bemont; the point is that ifwe follow the al ternati ve r~ading of the underscored sentenceabove, and disregard addi ti~nal amounts BPB contributed toBemont when assessing BPB's I "net economic outlay" or gaugingwhether "the value of the p~rtnership interest is nominal orzero," we would not be able ¡ to tell whether BPB contributed atrade or business. This camnot be right because, according tothe IRS and Treasury, one w~y to distinguish betweentransactions with a substantial, non-tax business purpoBe, onthe one hand, and the abusite transactions that Notice 2000-44was designed to prevent, on I the other, is to determine whether atrade or business was contributed to the partnership. Thisdetermination is impossible if everything contributed to thepartnership aside from the ~ffsetting options is ignored.- 21 -
To summarize, Notice 2000-44 describes two transactions.iThe one most similar to the! BPB Transactions involves thecontribution of offsetting options. This facet of thetransaction -- standing alohe -- creates some superficialsimilari ty to the BPB Trans~ctions, since the foreign exchangeswaps contributed to Bemontl are similar to options. Critically,iihowever, Notice 2000-44 goeß on to explain that aside from,contributing options, the "~axpayer' s net economic outlay toacquire the partnership int~rest and the value of thepartnership interest are no~inal or zero." In the case of theBPB Transactions, that simp~y is not the case, given theimillions of dollars of SOluFion 6 stock contributed to Bemont atiits formation. This is a c~ucial difference between the BPB,Transactions and the offset~ing options variation described inNotice 2000-44, and defeatsl any claim that the two aresubstantially similar.THE PLAINTIFFS' PURPOSE WASI NOT "SOLELY TO CREATE TAX BENEFITS"The IRS and Treasury hßve repeatedly, strenuously, andpublicly stated that Noticei 2000-44 transactions "where!designed, marketed, and und~rtaken solely to create tax benefitsunintended by any reasonabl~ interpretation of the tax laws."¡iAnnouncement 2004-46, 2004-~ C.B. 964 (May 24, 2004). Theirepeti ti ve and unqualified hature of the IRS and Treasury- 22 -Hl
Page 1: UNITED STATES DISTRICT COURTEASTERN
Page 5 and 6: of the transactions in order to com
Page 7 and 8: Expert ReportOfDavid A. WeisbachUni
Page 9 and 10: c.v. is attached as Exhibit A. I am
Page 11 and 12: The background for the rules allowi
Page 13 and 14: which provide a general defense aga
Page 15 and 16: 2000-44 transaction. Without expres
Page 17 and 18: for the potential tender offer of S
Page 19 and 20: In particular, it is my understandi
Page 21 and 22: taxpayer wil prevail on the merits
Page 23 and 24: APPENDIX - DOCUMENTS REVIEWEDDescri
Page 25 and 26: DAVID A. WEISBACHUniversity of Chic
Page 27 and 28: 143-151.Paretian Intergenerational
Page 29 and 30: APPENDIXList of Prior Expert Testim
Page 31 and 32: QUALIFICATIONSI am an Associate Pro
Page 33 and 34: dollar-US dollar exchange rate duri
Page 35 and 36: facili tate the pursuit of a tender
Page 37 and 38: Beal's and Montgomery's formation o
Page 39 and 40: "-"~-_._.~-,----_..__.._._.__._--_.
Page 41 and 42: LOAN PREMIUM VARIATIONThe loan prem
Page 43 and 44: premium variation, but the second a
Page 45 and 46: Beal and Thomas Montgomery stated t
Page 47 and 48: was planning to acquire. Sanding al
Page 49: irelationship cannot be eva~uated i
Page 53 and 54: IRS and Treasury sometimes refer to
Page 55 and 56: swaps in BPB (as opposed to within
Page 57 and 58: APPENDIX AETHAN YALECurriculum Vita
Page 59 and 60: ETHAN YALEVitae, Page 3PUBLICATIONS
Page 61 and 62: APPENDIX BDescriptionBa tes NumerMa
Page 63 and 64: IRS Information Release IR 2004-64,
Page 65 and 66: PURPOSE OF REPORTThis rebuttal repo
Page 67 and 68: (BM Investments LLC, was subsequent
Page 69 and 70: espect to a potential tender offer
Page 71 and 72: premises if the "transaction" refer
Page 73 and 74: e a payoff of at least $552.5 milli
Page 75 and 76: WAS BEMONT FORMD FOR TAX REASONS? W
Page 77 and 78: (Montgomery Deposition at 516:25-51
Page 79 and 80: his case (by showing that admitting
Page 81 and 82: case. Another set of e-mail message
Page 83 and 84: made in Australian dollars, for the
Page 85 and 86: 3. failure to treat the short finan
Page 87 and 88: CONCLUSION OF REPORTThere are signi
Page 89 and 90: DescriptionDeposition of Margaret M

United States' Motion to Exclude Expert Testimony of Plaintiffs'

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