Free Joint Status Report - District Court of Federal Claims - federal

Case 1:01-cv-00256-CFL

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Filed 10/16/2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
____________________________________________ ) MARRIOTT INTERNATIONAL ) RESORTS, L.P., MARRIOTT ) INTERNATIONAL JBS CORPORATION, ) Tax Matters Partner, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________)

Nos. 01-256T & 01-257T (Judge Charles F. Lettow)

JOINT SUBMISSION PURSUANT TO THE COURT'S REQUEST AT AUGUST 18, 2006 HEARING Pursuant to the Court's request at the hearing held on August 18, 2006, the parties, through their respective counsel, respectfully submit the charts appended as Exhibit A hereto summarizing the transaction at issue in the above-captioned actions; the Federal income tax consequences according to Plaintiff, Marriott International Resorts, L.P., Marriott International JBS Corporation ("Marriott"); and the adjustments made to Marriott's tax treatment by the Internal Revenue Service ("IRS"). In support of this joint submission, the parties respectfully state: 1. At the hearing held on August 18, 2006, the Court requested the

parties to submit "a chart that indicates the flows of assets and liabilities to various entities in this case and then also indicates at various points who's taking what deductions or what the tax consequences are, just from the standpoint of the

Case 1:01-cv-00256-CFL

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returns and how they've been adjusted . . . ." (Aug. 18, 2006 Hearing Tr. 22.) The charts appended as Exhibit A hereto are submitted pursuant to this request. 2. The charts appended as Exhibit A are intended solely to assist the

Court in understanding the evidence to be presented at trial and do not reflect any stipulations or admissions by the parties as to any facts for purposes of this action or preclude the parties from introducing evidence at trial that may be inconsistent with their contents. 3. Marriott's position regarding the Federal income tax consequences of

the transaction at issue, as shown in the charts appended as Exhibit A, is the position alleged in the Complaints, which correct certain errors in the original return. 4. The charts in Exhibit A use the following abbreviations: a. "MII" refers to Marriott International, Inc., which during the 1994 taxable year at issue was a corporation organized and existing under the laws of the State of Delaware and the common parent of an affiliated group of corporations (including but not limited to MORI, MICC, and JBS) filing a consolidated Federal income tax return. b. "MORI" refers to Marriott Ownership Resorts, Inc., which during taxable year 1994 was a preexisting wholly-owned subsidiary of MII.

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Case 1:01-cv-00256-CFL

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c.

"MICC" refers to Marriott International Capital Corporation, which during taxable year 1994 was a preexisting wholly-owned subsidiary of MII.

d. e. 5.

"JBS" refers to Marriott International JBS Corporation. "MIR" refers to Marriott International Resorts, L.P.

For presentation purposes, the charts in Exhibit A reflect the following

simplifying assumptions: a. b. All dollar amounts are approximate. MORI's $65 million short sale in April 1994 and $10 million short sale in August 1994 are shown as a single $75 million short sale. c. MORI's contribution of Repos to MIR ($63.7 million in May 1994 and $9.5 million in August 1994) is shown as a single contribution of $73 million in Repos. d. MORI's contribution of mortgages to MIR ($65.2 million in May 1994, $11.9 million in August 1994 and $6.2 million in October 1994) is shown as a single contribution of $83 million in mortgages. e. In a few charts, JBS's 1% interest in MIR is ignored as immaterial and all results are tracked through MICC.

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f.

Results from operations of the Marriott subsidiaries involved and of MIR that are not relevant to this presentation are ignored.

g.

Complexities from the repayment of principal of mortgages while owned by MIR are ignored.

Respectfully submitted,

s/Robert L. Willmore Harold J. Heltzer, Esq. (Attorney of Record) Robert L. Willmore, Esq. Alex E. Sadler, Esq. Crowell & Moring LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004 (202) 624-2915 (202) 628-5116 (fax) Attorneys for Plaintiff October 16, 2006

s/G. Robson Stewart* G. Robson Stewart, Esq. U.S. Department of Justice ­ Tax Division Court of Federal Claims Post Office Box 26 Ben Franklin Station Washington, D.C. 20044 (202) 307-6493 (202) 514-9440 (fax)

Attorney for Defendant October 16, 2006 *Signed with permission by Robert L. Willmore

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