-55-
acquire land and construct a plant; and (3) petitioner was
committed to retain the PCC investment for 12 years, while no
similar mandatory holding period existed in G.M. Trading.
Moreover, petitioner contends that unlike G.M. Trading, the
step transaction doctrine applies herein; thus, the exchange of
debt for cruzados and the cruzados conversion into stock should be
ignored. Therefore, according to petitioner, the gain or loss
should be measured by the difference between the basis in the debt
and the fair market value of the stock received. In order to place
a value on the stock, petitioner submitted the expert report of
Nancy Czaplinski, who valued petitioner's interest in the PCC stock
as of the transaction date at $5,544,000. Petitioner also submitted
the expert report and testimony of Steven J. Sherman, who valued
the same interest at approximately $6.77 million.33
Finally, petitioner claims that the value of its blocked
deposits on the secondary market is directly relevant to the value
of its equity interest in PCC. According to petitioner, the
$12,577,136 of blocked deposits had a $7,923,596 value on the
33 Respondent's appraisal experts, Scott Hakala and
William Cline, valued the interest at $12 million and $12.5
million, respectively.
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