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Petitioner argues that, like the accounts receivable in
Steffen, the source-attorney fees provision in the 1973 agreement
was a financing arrangement by which future CSB fees would be
used to redeem a retiring or deceased shareholder’s stock. We
disagree. The $5 million payment was for both decedent’s CSB
stock and any claims for work in process; in Steffen, we found
that the corporation paid the taxpayer solely for his stock.
Unlike Steffen, CSB and decedent did not intend to measure the
value of decedent’s CSB stock solely by the amount of the
insurance payment.
3. Erickson and Estate of Bette
Petitioner relies on Erickson v. Commissioner, 56 T.C. at
1123-1124, and Estate of Bette v. Commissioner, T.C. Memo. 1977-
404, because in those cases the parties to stock redemption
agreements included unpaid profits in measuring the value of the
stock. Petitioner's reliance is misplaced. Unlike the agreement
in the instant case, the written agreements in Erickson and
Estate of Bette were solely stock redemption agreements. Here,
as we have stated, the agreement provided for payment not only to
redeem stock, but also for any claims to cases or work in
process.
C. CSB's Ownership of Work in Process
Petitioner asserts that, under California law, work in
process is a corporate asset and that shareholders do not own
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