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Mr. Batson prepared an appraisal report and submitted it to
the Company. Mr. Batson's fee was paid by the Company and
charged as compensation to Mr. Thompson. It was Mr. Thompson's
understanding that both Mr. Batson and Mr. Hawkins, although
formally engaged by him, were also representing his wife, here
petitioner, with respect to her potential gift tax liability.
In due course, petitioner and Mr. Thompson received the
revenue agent's report and filed a protest. In May of 1992,
Mr. Hawkins, by letter, submitted the appraisal prepared by
Mr. Batson to the Appeals Office.
On or about August 11, 1993, statutory notices were issued
to petitioner and Mr. Thompson determining gift tax deficiencies
and additions to tax under section 6660 based on respondent's
valuation of the Company stock.
The petition was filed on September 1, 1993. Upon the
filing of respondent's answer on November 1, 1993, the case was
at issue. A Notice Setting Case for Trial, dated November 5,
1993, set the case for trial on April 11, 1994, and the Standing
Pre-Trial Order directed the parties to file expert witness
reports no later than 30 days prior to the first day of the trial
session.
On or about February 16, 1994, Mr. Thompson hired attorney
David Aughtry (hereinafter Mr. Aughtry) to represent Mr. Thompson
and petitioner at trial. A valuation expert, Z. Christopher
Mercer (hereinafter Mr. Mercer), of Mercer Capital Management,
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