- 33 -
803, 815 (1990) ("redeemable preferred stock received on a sale
or other disposition of property is 'property (other than money)'
for purposes of section 1001(b), regardless of the method of
accounting used by the taxpayer, and is to be included in the
'amount realized' at its fair market value").
In the notice of deficiency, the respondent calculated the
amount HCAII realized from the sale of the stock to HealthTrust
as follows:
1987 1988 Total
Cash and debt $1,536,541,894 $47,386,767 $1,583,928,661
Securities 559,637,646 6,455,800 566,093,446
Total 2,096,179,540 53,842,567 2,150,022,107
For the value of the Preferred Stock, the Commissioner used the
liquidation value of the class A preferred stock and the class B
preferred stock. For the value of the Common Stock Warrants, the
Commissioner used the value of the Common Stock Warrants reached
by J.C. Bradford.
Does The Danielson Rule Apply?
Respondent now contends that, pursuant to the rule first
articulated in Commissioner v. Danielson, 378 F.2d 771 (3d Cir.
1967), vacating and remanding 44 T.C. 549 (1965) (the so-called
Danielson rule), for purposes of determining the amount realized
from the sale of stock to HealthTrust petitioners are bound to
their agreement that the value of the Acquisition was
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