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presumption and requirements for allocating more than 50 percent
to player contracts. Bowlen I obtained four estimates of the
value of the Broncos' player contracts on the date of the sale of
the partnership interest from general managers and personnel
specialists of other NFL teams. The estimates ranged from
$35,790,000 to $59,215,000, with an average amount approximating
$45,700,000. Bowlen I assigned approximately $36 million as the
fair market value of player contracts, which amount equates with
50 percent of the approximate $72 million aggregate cost for
Bowlen and Adams' partnership interests. It should be emphasized
that a conservative valuation was used, and (as explained later
in this opinion) we find this assigned value was the fair market
value at the time of acquisition.
Petitioner's argument focuses on the factor that Kaiser's
gain attributable to the player contracts should have been
derived from the $36 million amount used by the partnership for
amortization purposes. Respondent, however, focuses on
petitioner's inability to prove the actual amount of gain that
Kaiser recognized from the contracts, under the basis limitation
rules of section 1056(a). Neither party offered direct evidence
showing the gain, if any, that the seller (Kaiser) may have
recognized on the sale of the partnership interests attributable
to the player contracts. Without such evidence, as required
under section 1056(a), respondent argues that the basis in the
player contracts is limited to the partnership's presale basis.
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