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Commissioner, 250 F.2d 242, 249 (5th Cir. 1957), affg. in part
and remanding in part T.C. Memo. 1956-178; Johnson v.
Commissioner, 85 T.C. 469, 477 (1985).
Respondent's expert was Herbert T. Spiro (Spiro). On
September 11, 1992, Spiro estimated that decedent's 71.43-
interest in CSB was worth $907,594 ($897,594 plus the $10,000
that decedent paid for the stock). Respondent hired Spiro to
prepare the appraisal during respondent’s audit of CSB's 1988 tax
return.
Petitioner’s expert was Alan W. Johnson (Johnson). He
estimated that CSB stock was worth $5,200,000 and that decedent’s
71.43 percent of that stock was worth $3,714,000.
1. Respondent’s Expert’s Analysis and the 1973 Agreement
The $5 million payment was in lieu of the payment decedent’s
estate would have received under the 1973 agreement. The 1988
amendment said that the $5 million payment was for both stock
redemption and work in process. The 1988 amendment did not
specify how much of the $5 million was for stock redemption and
how much was for work in process. The 1988 amendment changed how
the 1973 agreement was to be implemented by providing for the use
of insurance proceeds but did not change the fact that the
payment was for stock and any claims to cases or work in process.
Thus, to decide how much of the $5 million payment was for
decedent's stock and how much was for work in process, we will
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