United States' Motion to Exclude Expert Testimony of Plaintiffs'

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the principals want to pursue the opportunity as partners. Thisis exactly what happened in this case, according to statementsmade in deposition by the principals.(E. g., MontgomeryDeposition at 516:7-517:9.) Three months is not an unusuallyshort interval.The second fact relied on by Dubinsky is that "Montgomery'sinvolvement as a member of (Bemont) clearly served a substantialtax purpose under Beal' s tax strategy."(Dubinsky at 23.) Thisis incorrect. There was no tax reason why Beal needed to haveMontgomery as a partner given the participation of Beneficial inBPB.The third fact relied on by Dubinsky is the $150,000 buyoutpayment paid to Montgomery. Dubinsky argues that "it appearsthat the additional $150,000 so-called 'cash buyout premium'paid to Montgomery upon his redemption was nothing more than anadditional fee for his role in the pre-planned tax scheme."(Dubinsky at 24.)Documentary evidence indicates that Dubinskywas paid an amount consistent with the fair value of hisinterest.(See Written Consent in Lieu of Meeting of the SoleManager of BM Investments, L.L.C., SOL6BM00058-59.) Montgomerystated at his deposition that the $150,000 amount was thebyproduct of an arm's-length negotiation between Montgomery andBeal, rather than a pre-planned fee as Dubinsky claims.- 13 -
(Montgomery Deposition at 516:25-517:20.)Dubinsky does notdiscuss this evidence.Thus the facts Dubinsky marshals to support his argumentthat Montgomery's participation in Bemont lacked economicsubstance do not prove his point.Furthermore, Dubinsky doesnot discuss the deposition testimony of the principals thatcontradicts his conclusion. For instance, Beal stated in hisdeposition that the reason Bemont was set up was to giveMontgomery a "disproportionate share of the profits" from theventure.(Beal Deposition at 247: 15-20.) Montgomery explainedthat he and Beal were exploring alternative investmentopportunities with respect to Solution 6, "so it just made senseto consolidate all of our interest (s)" in Solution 6 in a singleenti ty.enti ty.(Montgomery Deposition at 286: 11-18.)Bemont was thisOne is left to wonder why Dubinsky does not evaluate thesestatements and their bearing on the question of whetherMontgomery's partnership interest had economic substance.Perhaps it is because Dubinsky did not consider them. Or maybeDubinsky considered these statements but determined thatMontgomery and Beal are incredible as witnesses. Whatever thereason, these statements conflict directly with Dubinsky's claimthat "Montgomery's involvement in (Bemont) had no real economicsubstance. " (Dubinsky at 23.)- 14 -.__.~._".._----,----_._--------_.,_..._---~~--~ "'~--~-----~'--'-"---_...._._---~._--"--_._-._-~.,.~..._--
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UNITED STATES DISTRICT COURTEASTERN
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of the transactions in order to com
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Expert ReportOfDavid A. WeisbachUni
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c.v. is attached as Exhibit A. I am
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The background for the rules allowi
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which provide a general defense aga
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2000-44 transaction. Without expres
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for the potential tender offer of S
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In particular, it is my understandi
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taxpayer wil prevail on the merits
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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 and 50: irelationship cannot be eva~uated i
Page 51 and 52: To summarize, Notice 2000-44 descri
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: WAS BEMONT FORMD FOR TAX REASONS? W
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
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United States' Motion to Exclude Expert Testimony of Plaintiffs'

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