Liquid Air Corporation and Subsidiaries - Page 7

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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.                                                                 


               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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