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proximate to the valuation date and in spite of litigation pending
over the SB and mixed beverage permits, petitioner and others viewed
2618 Inc and the Club as constituting a profitable business
enterprise. In correspondence and other documents, petitioner
consistently represented the value of 2618 Inc at or exceeding $1
million. Offers from third parties apparently were received to
purchase the Club or the stock of 2618 Inc at a price exceeding $1
million.
A report prepared by Helmle that petitioner used during hearings
held in 1989 relating to the SB permit stated that 2618 Inc with an
SB permit would have a value of $2 million and could earn net profits
each year of over $1 million. Helmle also stated in the report that
since 1980, the Club had average annual sales of alcoholic beverages
of over $2 million.
Petitioner testified that, in his opinion, the Club in 1991 had
a value of $1.1 million and that in 1997, at the time of trial of
these cases, the Club had a value of $2.1 million.
As indicated, we have found that petitioner's acquisition of the
stock of 2618 Inc did not become effective until September 20, 1988,
with the Club’s receipt of the mixed beverage permits from TABC.
Thus, the dispute involving the mixed beverage permits was resolved
simultaneously with petitioner’s receipt of the stock, and we do not
regard that dispute as having any significant effect on the value of
the stock of 2618 Inc as of the date petitioner received the stock.
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