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L'Air Liquide's beneficial ownership of petitioner's stock fell
to approximately 55 percent. Approximately 32 percent was owned
by Chemetron, leaving maximum public ownership at approximately
13 percent.
Discussion
The issue we must decide is whether petitioner overstated
the basis of the assets acquired from Chemetron by $3,081,584.
The $3,081,584 represents the amount of the post-closing
adjustment provided for in paragraph 22(m) of the Contract.
Respondent argues that petitioner's basis in the property for
depreciation purposes is the cost of such property, and that the
cost of the property was clearly set forth in paragraph 2 of the
Contract as $60,030,000 (the fair market value of 3,335,000
original issue shares of petitioner). Petitioner, on the other
hand, argues that the post-closing adjustment was intended to
equate any increase in the fair market value of petitioner's
stock between the Contract date and the closing date with the IGD
assets to be delivered to petitioner. Because the adjustment
mechanism was bargained for at arm's length, petitioner argues
that the additional value transferred after closing should be
reflected in petitioner's cost basis of the assets. Petitioner
bears the burden of proving that it is entitled to the additional
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