Free Motion to Compel - District Court of Federal Claims - federal

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 1 of 38

EXHIBIT C-12 .

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

DEe 09 'en 15=35 FR a: EDlst is12 39 92 TO 351

II .

Page 2 of 38
P .1&'1:3

Colida Edon Deopment Files

Fn:\lli James M. Deey, Syr
Da Novcm 26, 1997

Re ColioÜda Edn Develpmat Leered Le

Colite Edso Delot (CE) prse to cn in a lca iron tht wil
us th IlWcrp le acun mo ofF AS 13. Br Delautt Vicc Prden an I
have ha sc cI r~d: t: pc tron an he ba prvide th

prse acunti:

followig iition which we have reed up in t'hing our coclus rega th
. A memordw7hUlacllc Sl. Ducrtin. 1' me wrtt by

retavc of Co FiD Advi LP. CE's fial adso in ths
trtion wu prde to Be Nese of Ar ADcl. LL (M). AA wa

reue by Co to pne their opinon rcprini the approte acçountig

for th hyth tron

. lett daæd Nove 21, 1997 of AA Th lett deõc M's conclusions reiang Q

th 1rOD desbc ùi th Trtion Strct Deon. /
awbe of qucmaa we develop and rcsp wer prvicl by CE anor

. Rc to quon Dug th cour of dision rccardi th tntlODS a

Comee.

Tb doc Il atthe
lh 1\eita strtu is .. "lea-in" by .. Trot eslied by CE of an electr utity

aset &o i Dutch munl elecc utty (E. The Trut is a lC$ in th 1nlÌon SimulCOlY, th Tru "lea out th lea as to a subsidi ofEZ. In ths nni;on th Tr is a sulessor.
Accodiig for the "Head Le"
Th he lea in is a 44ye lea re one paym at çlosi an on payment at th

en ortl te oftbe la. PAS 13 rc tb. lcu be acte for as a capital1cae if
it me my on of the followi c:tti:
. Th lea trfer the asse to th lessee a.t the end of the leae tc;

CE 003768

PF005602

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 3 of 38
P.11113

DEe 09 '91 15:35 FR CO EDISC DE12 39 92 TO 351

To th Coalidtc Ed Files
Pag 2

Novembe 26, 1997

. Th leae cotans a ba purche option
. Th lca te is 75% or ~tc oftl economic usfu lie of

th pr; and
the

. Th pret vaue of thc minimum lea payments is 90% or mor of the far value of

lca pr at the inception Dr th lc:.

We have been advied tht Deoitte &; Toue Valuatioi Sece ("D&;1) wi provide an
apsa of th fair vaue of the pr at th intion of th lea an an opÍDon u to th

ecc usfiliCe of th pr. We have .Iso bC adVì tht Co will
Lee an th sublea).

provide a c:cution ofth prt wlue of th mium lea payments (bth for the He
For pui of th memo, we have as tht th econo life ofth pr is les

tb 58-21 )' an tht di prt vaue of th DUum le pats (M'I) exc:s
9OAi orth fA vaue of1b pr. Thfor, th pr He I. lron me
~ th amomt equa to the pr value of

at lea two reuien for clasfica by th Ti as a gpita ~ as and ob~n
the MU"S. Pfdcd lUçh vaue do not exce -

th fa woe orth~.
Accoudq fDr the SUblea
Th sublea ha an inti t. 0(20 Yeawith a purha option at th end oftbt tc Shuld th purlwc option Dot be c:is th Tit as subles ba a put tcew option

un which di subles would pa ret for 17 yea.

To dein th acoun1Î for th sulea th 1Ì is reD' to coder th SIe four

crU: as desbe abvc.Tb Tr Str Depton. pa 4, inte tht "it is
collai rccnts oued beow th th subles wil exe th purha opon"
If, as,of'th intion of the lesscc th exer of

rçle to au ba on ao-cç fa mati above. di th m:t md

its pure option is '"ly asum;'
th fa vaue ofthc

th th sulea mets th send critc pubu option. Also, we have be
advi tht th ML', unde th 5Ublc will equal or exee 90% of

leaed prer. As a ret, th sublea mee bo th scdand fou c:teia ofFAS 13. However. PAS 13, pahs 35 th 39, sp addition te for açço\Btig and

reg for sulc an sim tronl. We bave codeæ in pacular the
reuimets of

either cnæra ç or d but DOl crtea a or b of pagrh 7, th orgi1c iba, with one
exception clasify the no lea il eicc with the crte of paarh 7.e an 8 ony."

pagrh 39.b. Parph 39.b rcuis "iftb or (Hea Le) met

Th Head Le mets both er1a. ç ïm d. P..grh 39.b fuer prde "the one

extiOD ar wh the tini an ot cirumccS suunin th sulca ar such
as 10 suges tht the suleae wu cnta as 1f intc¡rl pa of th ovcr trtion in

wmch th origiles sees ony as an inteedar. In th ea th sublea shaJl be
clas tied acor to the critea of papaph 7.c an d. as well as the crtea of pargraph

CE 003769

PF005603

Case 1:06-cv-00305-MBH Document 21-6 Filed 04/03/2007 DEe 09 'r; 15:36 FR ~ EDISG DE12 J' ~ IU ~l

Page 4 of 38
r. 1.4: J.~

To th Colidte Ed Files
Page 3

Novebe 26, 1997
8. In aplyi th aitc of 7.d th fa vaue of ch lw pr shl be the fa vaue to
the orgi lesor at th inc;on of

th or lea" Wi have code wheer the

Tr faned by CEO me th defition of a "iteediary" ~ have conlud tht it doc. Theror, th sublea ca be clafied eith aç to pairph 7.c or cl tht is, the
the 15% of ceomic Hfe teorth 90 offai vaucoftb lea prope te If

sublea mee th fu condtions ofFAS 13 it will meet the reents for dit fianein¡ lea trtment Th condon ar:
. The fa vaue of

the lea as is equa to the Trut's cost

. The tr ba no sipificat fù cots with re to th lea pr or th

t:etion th ar unown

. eollectibilty is iuly as
D&T will provide an ~iDon re~ tb fa vaue Of~pc whch wil indicaic th

th fa vaue will eq th co to th rut. Th Hea is trple net therfor th ar

no futu unwn cots. EZ is a mu citity with an "A" crt iatia. Acy,
th sublea may be accun for as a di ft.ftii,iz lea Uner FAS 13. ~
In ord for th dit fi lw to be açcountC for as "leved leae," F AS 13 provies th 6icr coadticm:

. The tron involve at leat th pa~ lesso. a lesee and a long-ta

crto

. The finanng prvided by th long-te crtor is non reur to th geer crit of th les an is "substial;" an
. The IcsQ£'¡ net invetmen delin in the eay yea oítle lease md nses in 7

subuet vcu. I
the AA lcu, paic 4, debe how. frm an acwiti peve. th

The fit cotion ii me. Th lCS is EZ, the less is the CE Tnit and the long-te
cretor is pro to be ABN B8D Th th coti is al me Th Traon

Str Deption cota a sce wbb rc1lcç the rcui pa or declii net
Dec;ptian debe 1b '"ecur prsion of the pred tion." The lat th
pa;rhs or

invCStnt in the eay YCl orth ici an ineras inve in subseuet yea. With ret to the send cotion describe abve. th AA let ai th Traon Stncti

propose troDS me 1h reur pron orthe sed crtera. to be acunted for
'''racton sui Desmon. it cx SO-i. of th fair valu of the prpert.
as a levered lea. We ag with tbsc colus, 8S tht th prop stnctu is pu in place in th fi tron. til fmmg is. al substi as, acg to me

CE 003770

PF005604

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 5 of 38
P. 1311:3

lEe æ 'en 15:36 FR CX EDI5t Il12 39 92 TO 3S1

To th Colidated Edon Files
Pae 4

Novembe 26, 1997

/U . result, the subleu quafies fit as i di fi leae and fuon: mee th
crite clafied as a levered lea UD FAS 13.

,. 7

DefiaidoD of. Le
We al codci th queson ofwbcth or

not th prse trction is in fact a lea

cover by F AS 13. Unde F AS 13, "i lea is defied u an agen coveying th ri¡ht to

us Pfpc, plat or eq (l aDor ~iale aset) usly for. stte peod of'
Wne." We have beadvi tbith lessee. th Tru ha th ri to use the

pr. If

th put rc option is cxc:ised by th TIU at the end of the put ren peod (i .e., year

31 oCtb sulea), th wilrc ICVC ye unde th ta oftb or be leae.

Duri ih peod tb Tru ha th ngh to us th pr an deve re or oth
TCvenue frm SQCh us Al at th en of th inti tc of th sublcu (yea 20) if neth

the purha option nor th pu rctw option is acsc. tb tb Tru ba th nght unde the Hea Le to us th pr and deve re or oth reves thfrm. As a ret.

we beev th pr trtion mcctl the defition of. "lea."
QUaltioDS
lbe abve colusOl are subjeç to th irtions bein execut in fon and subtace .

substal u describe abve md rept of the doaits pr by DcT an Co rega fa ma~ iu economc usfulire. an tJìèihgan viIhle of
~'s, resy. Al, tI magemt retion le will cota TCrctatåon
cosistet with th inoron prvided above inlud th followig:
. Fair vaue of . Ecnomic us lif of

the pr

. Pr va of minimum lea pa1Jts
. The abilty of

th pr

th 1r to "u" tb pr an thCRoi, trt the He Le an the

sublea as leas un F AS 13

...\llac\i 1M file

CE 003711

** TOTFt PA.

13 **

PF005605

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 6 of 38

EXHIBIT C-13

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 7 of 38

In ACM, the taxpayer entered into a near-simultaneous purchase and sale of debt instruments. Taken together, the purchase and sale "had only nominal, incidental effects on (the taxpayer's) net economic position." ACM åt 250, The taxpayer claimed that despite the minimal net economic effect resulting from the application of the installment sale rules to the sale. The court held that transactions that do not "appreciably" affect a taxpayer's beneficial interest, except to reduce tax, are devoid of substance and are not respected for tax purposes. ACM at 248. The court denied the taxpayer the purported tax benefits of the transactron because the transaction lacked any significant economic consequences other than th~ creation of tax benefits.

Taxpayer's Position:
In a meeting with the taxpayer on March 5,2002, their position was that their position is stated in the tax opinion letter written by Price Waterhouse on December 10,1997.
Here are some of their main positions:

1.) After examining the leveraged lease pricing printout from Cornerstone Financial Advisors (advisor to Roca on this lilo transaction) they feel that they are in compliance with Revenue Procedure 75-21, the safe harbor provisions of Proposed
Treasury Regulations 1.

467-3C¡(2) (i),

2.) After examining the appraisal report, they stated that the fair market value on the plant on the closing date, and lease termination date was fairly stated, The estimated useful life, residual value was fairly stated.

Conclusion;
Viewed as a whole, the objective facts of this Lilo transaction indicate that the transaction lacks the potential for any significant economic consequences other than the creation of tax benefits. I will describe the various reasons I have come to this

conclusion:

a.) The presence of a numer of defeasance arrangements during the life of the transaction that are offsetting and circular in nature which eliminate any significant economic consequences of the transaction, Some of theses are outlined

below:
1.) debt defeasance account, set up at inception of deal (12-15-97) to pay the $ 80.8 million debt that Roca through the trustee (Wilmington Trust) had used in the inception of the deal to finance the debt portion of the $120.1 million prepayment. 2. L investor defeasance account, set up at inception of deal to enable EZH to pay the fixed payment option at the end of the 20th year. 3.) lease collateral deposit, set up at the beginning of the put renewal term to pay the non-recourse portion åf the Head Lease rents due at

end of the 44~ year .

4.) trustee treasury collateral deposit, set up at the beginning of the put renewal term to pay the recourse portion of the Head Lease rent.

b.) There is an undisclosed subsidiary (Con Edison Leasing, Inc.) on the form 8S1, which was incorporated in Delaware' for the purpose of a single transaction, to engage in an activity, cross border leasing which is out'side the corporation's core business of supplying electricity, gas and steam in the New York metropolitan area. It had no activity in prior years, but material. losses in the current and subsequent

years.

U800709

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 8 of 38

EXHIBIT C-14

Page 9 of 38

A
1

B
Project #

C

0
Project Name

Region
1000-North America
1001 USA
VISY Paper

Country

2
3

4

Filed 04/03/2007

5

1002 USA

Charter Oak Energy

Document 21-6

6 7 8 9 10
11

1003 1004 1005 1006 1007
USA Mexico USA USA World wide

Nations Energy
Lerma Industrial Park

Ada Cooeneration
Carson Cogeneration

EDHI Agreement

3000 - Latin

12 America & 13 Caribbean

Case 1:06-cv-00305-MBH

J!
15
16

3001 Peru

EGASAIEGESUR
Guatemala privatization

3002 Guatemala
3003 Guatemala

GENOR

17

3004 EI Salvador

EI Salvador Electricity

18

3005 Peru 3006 Peru

Peru Power Holdings

J!
20

EGEMSA

3007 Jamaica

Rockfort Diesel

CE 011990

PF006321

Page 10 of 38

E
1

F

G

H

I

J
Partners

Description
60-100MW

Size

FuelfTech.
Landfill & Natural VISY

Target Return
N/A

BOD

Approved

2
3

Greenfield on-site generation
4

No

Acquisition of a utilty's sub.

Gas various

No

Filed 04/03/2007

5

Acquisition of a utility's sub.

No

6
7

Document 21-6

8 9 10

Greenfield on-site generation Acaulsltlon of operating plant with PPA Acauisition of operating plant with PPA $100 milion equity
-

100MW 29,4 MW

42MW various

Natural Gas Natural Gas Natural Gas

various

MCNIC/Delta MCNIClDelta CEA

No 13% No 13% No

market

Yes

11

12 13

acquisition of operating generation assets & construction of 305 MW

various

Constellation

No

new generation

Case 1:06-cv-00305-MBH

i15 16

. . ..... .

acquisition of operating generation assets & construction of 150MW

various
40MW

IEP/IPL

Yes
diesel
IEPIIPL

new generation construction of onsite generation
Acquisition of operating distribution company

Yes

17
Greenfield construction

150 . 500MW

Natural ga5/GTSC

IE?

No

18

J! Construction of expansion at an existing site
20

Acquisition of operating hydro plant

100MW
30MW

hydro

No

diesel

IEP

No

CE 011991

PF006322

Page 11 of 38

K
L

M

1

Current Status
Rejected by CEO

Reason
eEO is prohibited from NYS projects Inactive
CEO is not interested in these minority project interests and persnnel with limited track record,

Status

2
3

4
Rejected by CEO,

Inactive

Filed 04/03/2007

5

Rejected by CEO

CEO is not interested in these small Inactive

project interest; key people have
left and most markets are covered by CEO and IEP.

6
7
8

Feasibility study underway Due diliaence underway

Document 21-6

9 Due dilii:ence underway 10 CEA Implementina
11

Active Active Active Active

12
13

CED withdrew

CEO decided to focus on
Guatemala, In retrospect, decision

Inactive

Case 1:06-cv-00305-MBH

17

was a good one since the sale is delayed. 14 CED consortium did not win the Competitive with the winner, lost by Inactive $O,O02? 15 bid Active Project scheduled to close 16 on??? Inactive Rejected by CEO

Too much capital needed by 12/31/97 ($150-$200M), Technical expertise not quite ready

Rejected by CEO

Long temi fuel supply questionable; Inactive
SCGT can not compete long term in deregulated environment

18

~
20

CEO interested but project is on hold by government Capacity is not needed presently, CEO is not pursuing

Active Active

CE 011992

PF006323

Page 12 of 38

A
21

B

C
3008 Jamaica 3009 Peru
Southern Peru Mining

0
Caribbean Cement

22

Filed 04/03/2007

~
3010 Venezuela

Margarita Island

24 25 26 5000 - Western 27 Eurooe

3011 Brazil

Electrosul Generation

3012

28 29

5001 Belgium

Belgian Refineiv Coaeneratfon
DEA Mineraloel

5002 Germany

Document 21-6

30
31

5003 Portugal 5004 Germany 5005 Netherlands

Sidurgia Ncional, SA

32

GASAG Berliner Gaswerke Aktiengesellschaft EPON

Case 1:06-cv-00305-MBH

33 34

5006 Netherlands 5007 Netherlands

EZ
ENW Gas

CE 011993

PF006324

Page 13 of 38

E

F

G

H

I

J

Construction of expansion at an existing site
21

60MW

coal

IEP

No

Greenfield construction of generation
22
ACQuisition of electric system

200-300MW

coal

IEP/Southem
SithelMarubeni

No

No

Filed 04/03/2007

l!
Privatization of generation

3680MW

hydrolthemial

No

24 25 26 27

Acquisition of existing plant
28

30-40MW

various

No

Construction of onsite generation

40MW

GTCC

No

Document 21-6

29

Construction of onsite generation
30

open

No

acquisition of gas distribution company
31

No

32 Sale leaseback

Sale leaseback

$150M $150M

GTCC GTCC

Bane One

Bane One

Yes Yes

Case 1:06-cv-00305-MBH

33 34 Sale leaseback

$150M

Bane One

Yes

CE 011994

PF006325

Page 14 of 38

K
L
M

CEO is not pursuing
21

Capacity is not needed until 2001

Active

CEO considering for the future Capacity not needed at this time
22
CEO considering participation with strong partners

Active
Active

Filed 04/03/2007

~
Preliminary; CED is to study
the Information Memorandum
24 25 26 27

Project is delayed by Venezuelan government
Active

CEO evaluating. Engaged Pan
Eurasian to do market study 28 CEO is in ear1y stage of 29 develoDment CEO is in earty stage of development, Pan Eurasian to 30 explore further CEO unable to pursue
31

Active

Active
Active

Document 21-6

Timing is too short and capital requirement is too crest ($500M)

Inactive
Inactive Inactive

32 CED pursuing

Documentation completed;
most recent draft of the 0& T

Case 1:06-cv-00305-MBH

valuation letter wil be retumed
to 0& T with comments this week, When D& T issues the letter, Sherman & Sterling final will then issue its final opinion

letter, both of whicl wll be sent to PW for us
33 34 CEO Dursuino

Active

CE 011995

PF006326

Page 15 of 38

A

B

C

D

Filed 04/03/2007

35

5008 Netherlands
ENECO

36
37

5009 Switzerland 5010 Netherlands
5011 Switzerland

SIG District Heating Plant
UNA Power Plant

38

EG Laufenburg & EWZ

Document 21-6

39 40 6000 - Eastern
41

5012 UK

Humber Power

Europe
6001 Czech Republic
Kladno ECKIECKG

42

~
44 45 46 47

6002 Poland

EC Melee

Case 1:06-cv-00305-MBH

6003 Poland 6004 Czech Republic

Legnica CHP

Budejovice CHP

6005 Poland 6006 Hungary

Elana CHP

Nitrokemia

48

6007 Austria

CEnergy AG

CE 011996

PF006327

Page 16 of 38

E Leaseback of hot water and gas distribution

F

G

H

I

J

$200M

Bane One

Yes

,.

Filed 04/03/2007

35

Construction of onsite generation
36
37

25-50MW

GTCC

No

No

Leaseback
38

Document 21-6

Leaseback
39 40
41

-,

$600-800M
$700M

hydro

Capsar
gas
NatWest

No

No

Acquisition of existing plant
42
Construction of expansion to Polish thermal plant
143

365MW

gas and brown

Yes
200MW
coal GTCC

No

Case 1:06-cv-00305-MBH

Construction of generation

30-100MW

coal

No

44 45 Construction of expansion of plant

Acquisition of existing plant
46

401MW 40-100MW

gas and coal gas and coal

No No

Acquisition of existing plant
47
Strategic investor In company to Invest in Eastern European energy companies

30MW
$25M minimum

open
CA IB Investment Bank AG

No

20% No

48

CE 011997

PF006328

Page 17 of 38

K
ceo pursuing; The due

L

M

Active

dilgence trip to ENECO did not reveal any fatal flaws, Two days of negotiations with ENeCO generated good progress, Revised transaction schedule issued by ENECO's
investment advisor shOWS

Filed 04/03/2007

closing on 2/13/98.
35

ceo in early stage
36

Active

development; Pan Eurasian screening the economics
ceo needs more information
CeD studying the preliminaries

Active

37 38

Active Active

Document 21-6

CEO studying the preliminaries
39 40
41

42
ceo pursuing, Engaged Pan

Inactive CEO pursued but effort stopped Capital requirement exceeded those desired for first intl deal Active

.£ Poland
ceo pursuing, Engaged Pan

Eurasian to do market study on
Active

Case 1:06-cv-00305-MBH

Eurasian to do market study on
44 Poland 45 ceo investigatina CED pursuing, Engaged Pan eurasian to do market study on 46 Poland More infomiatlon needed for 47 CeD to decide

Active Active

Active

Information received on 1/12/98, CEO is currently reviewing the concept and learn more about the players,
48

Active

CE 011998

PF006329

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 18 of 38

EXHIBIT C-15

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 19 of 38

To:
Re:

Herbert Rosenbluth
IDR# OHR-OI02 SAI# 613

Date:

April 9, 2002

Reference is made to above

captioned Information Document Request (IR), as amende!! to reflect a
which is attched hereto as Exhbit A. In your IDR, you suggest

response date of Apri121, 2002, a copy of

tht a loss taen by the tapayer in the amount of $937,331 has been "deemed" not deductible, and you

question why the resulting underpayment of ta should not be subject to penalties as "negligence" under the Internal Revenue Code of 1986, as amended (the "Coe"). Subsections 6662(a), (b)(I) and (c) of
We have no documentation from the Internal Revenue Service evidencing a disallowance of the loss in this, and the fact tht no grounds for any such disallowance are stated in your IDR, it is diffcult to speculate regarding
Code Section 6662 would be inapplicable for the reaons set fort below.
rules or

question, nor do we have any reason to believe that the loss should be disallowed. In light of

the applicabilty of any penalties. Neverteless, assuming for the sake of argument that there were to be a

fial determation of a cour of competent jurisdiction disallowing the loss. in question, the penalties under
subsections (a), (b)(l) and (c) of

Code Sections 6662(a) and (b)(l) provide for a penalty in the case of "negligence or disregard of

regulations." Code Section 6662(c) provides that the tenn "negligence" includes any falure to make a
reasonable attempt to comply with the provisions of ths title. Code Section 6664(c) provides that no

penalty may be imposed un~er Code Section 6662 with respect to any portion of an underpayment if it is
shown. that there was a reasonable cause for such portion and that the taayer acted in good faith with

respect to such portion,

In connection with the tranaction in question, the tapayer sought the advice of both internal and outside
ta advisors, .who performed exhausve research in order to render ths, advice: Established case law
suport the position that the taayer is the both the lessee and the sublessor of an undivided interest in a

power plant ~!W Fra Lvon Co, v. United States. 435 U.S. 561 (1978). ~ also. Rev, Proc. 75-21,
1975-1 C.B. 715. TIs being the case, the Code expressly permts the taayer to deduct the expenses
which are the subject of

your IDR; namely, interest, rent and other expenses incurd by the tapayer in its

capacity as 'a lessee/sublessor in the traction, See. Code Sections 162 and 163. Taxpayer ha not, to its
-knowledge, disregarded any rues or regulations in connection with its legal analysis of

ths traction, and

such analysis in and of itself represents a reonable atempt by the taayer to comply with the Coe. The
law is clea tht a taayer who reasnably relies on the advie of comptent ta advisors is generaly

relieved frm liabilty for negiìgence. ~ Treas. Reg. Sec. 1.6664-4(b) and (c), ~ alo. 2002 CCH
Stadad Federal Tax Reporter (891b Ed.), Par. 39,6S1.55 (and authorities cited therein).

Moreover, as previously indicated in taayer's response to your 10M OHR-OIOI
(SAI# 526)~ the traction in question clearly had both ecnomic substace and a stong business
pwpose, and wa both consistent with and in fuerace of, the taayer's st business pla of

makg

reè.

investents in both domestic and intetional energy inb'cte projects. The taayer entered into th traction only afer undertg exhustive due diigence. The taayer's due digence effort are reasonale prudence would set forth in detal in 10M 75 (SAl# 608), and are fa in excess of what,

In light of the good faith effort underten by the taayer to asrt the proper trtment under the. COe of the traction in question, and the care and prudence exeicised by the tapayer prior to mag
th investent, the penties for neglgence provided for in subsections (a), (b)(! and (c) ofCa Section 6662 caot be applicable.
223318

US06048

Case 1:06-cv-00305-MBH

Document 21-6

Filed 04/03/2007

Page 20 of 38
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Substitute for
Fói'ø 4564

Department of the Treasury -lnteraa 1 Revenue Service . INFORMATION DOCUMENT REQUEST

". ",,;.;,
lOR No: OHR..Ol02.
. .~. .

Naiie. aiid Address of Taxpayer
.CONSOllÐATED EDI50N COMPANY OF HEW YORK, INC. AND SUBSIDIARIES
.. 4 IRVIIIG PLACE

S.S.N. or E.l.N.: 13-5009340

Sain No: 6)3.. . ..
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. -llàìe (ssÍied: 03/2IAOO'?';:

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NEil YO

11K NY 10003
Tax Periods: 199712

Entiy No: 000001 Entity: CONSOLIATED EDISON CQMPANYOF NEIi YORK, INC.

AND SUBSIDIARIES

S.ubject: NEGI.GEHCE PENlT
Submitted To: JAMES C. ALLAN
Title: MANAGER, FED. I.T.

Response Due: 03/28/2002

lorkpaperRef:
Requested 1 nformat i on:

(.
Dates of Previous Requests:

This lOR replaces and supersedes IDR'lQO in which the Examining' Offi.c:è'r. ,;'
ited the wròng subsection of the IRe.

, ,,!,"~, , :

aSs stems from the taxpayer's par.tici.pation in a lease-in and lease-out '.' .:.,:" ransact ion. It has been deemed that the loss is not deducti bl e and that .such .
, The penalty ttributable to such'

The taxpayer deducted a loss of $937,331 on its Fo~m 1120 for iggt. the

edLlction èonstitutes nègl,igence as defined in IRC Sec. 6662(c). ACCOrdil',9.1Y.'/.'¡~:;':' ,\

he penalty under IRC Sec..6662(a) is deemed applicable. ~..~."('"~G)(il

equals 20% of the portion. of the underpaymen.tof .ta~ '. ;f.":'.,d,','
. , ;" .,:" ;~,

deduction. ".:, ".
,

Attached hereto is a copy of the code sections cited abòve.

".

PI ease subm; t a wri tten statement, gi vi n9 reasons' why the penal ty shoul ~ ot be as:5essed.

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... ::"I"'~ ',: (.'
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Please return a copy of
this request with the

Requester: 'HERBER ROSENBLUT.H ID: I3-Joo9J Title: TEAM,COORD~N,ATq~,~~'t~~~i" ,/,.'~\.:t~;;" ..~;

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Address: 110 lEST 44TH STREET ':', ~ff!èe: ,21-m-6037~., ,.E~t;i::;fCJ('" '~'...; /, :
, '.' . , Exam. ~lte: 21H60-3119' E,it:',,~,/.~,:.,,_ ..'.' '. ..

reaae.teø docuiients. to:
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