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1. An independent appraisal by a qualified
competent appraiser will be obtained, which
determination will be the basis of the price and terms
upon which the hospital will be sold.
2. All documents necessary for the closing of the
proposed sale and related consents will be negotiated
and prepared by separate counsel for APC and the
purchasing entity.
* * * * * * *
Following Mr. O'Donnell's recommendation, the board hired
Ray J. Sheldrick (Mr. Sheldrick), a business appraiser, to
determine the fair market value of the hospital. On March 5,
1982, Mr. Sheldrick submitted to petitioner his Summary Valuation
Report, effective as of September 30, 1981. Using the asset-
based approach, Mr. Sheldrick determined the fair market value
for the hospital as of September 30, 1981, to be in the range
between $3,500,000 and $4,300,000. Mr. Sheldrick's appraisal did
not include the Belcher Road property or County Road #77
property.
On May 27, 1982, the IRS issued a PLR to petitioner. After
reiterating the facts as submitted by petitioner and presenting
the applicable law, the PLR states:
As noted, arms-length standards will prevail
during the negotiations and sale, as you will certify
by maintaining appropriate records, attesting to the
fact that the price was set at fair market value and
that no loan abatements or other special concessions
will be afforded to the present directors in their
capacity as purchasers and/or operators of the
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