Pope & Talbot, Inc., & Subsidiaries - Page 4

          properties; respondent disagrees;2 and (2) respondent maintains             
          that a portion of the $1,364,071 in expenses should be allocated            
          to the transfer of $1.5 million in working capital and to the               
          sale of the installment notes receivable; petitioner disagrees.             

          Inclusion of Working Capital                                                

               In Pope & Talbot II, the primary issue for decision was the            
          fair market value of the Washington properties distributed by               
          petitioner.  Our valuation was limited to the fair market value             
          of timber, timberland, land development and resort properties,              
          and related assets on the Washington properties.  Neither the               
          value of the $1.5 million in cash transferred to the Partnership            
          nor the value of the installment notes receivable sold to the               
          Partnership was in dispute in Pope & Talbot II.                             
               In determining the fair market value of the Washington                 
          properties, we grouped the properties into four separate                    
          categories and described the assets in each category.  These                
          descriptions include, for example, the amount of merchantable               
          timber that could be harvested, the amount of land that could be            
          developed, and the various improvements on the properties.  We              
          examined the assets in each category and, with the assistance of            
          expert valuation reports, determined the fair market value of               
          assets in each category.  We concluded that the value of each               

          2Petitioner's Rule 155 computation treats the working                       
          capital as part of the Washington properties, in effect, reducing           
          the fair market value of the Washington properties by $1.5                  
          million.                                                                    




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