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credible. Where the testimony of Mr. Hall and Mr. Scott was
conflicting, we relied on Mr. Hall's testimony. Mr. Hall's tes-
timony establishes that Mr. Harrison, Mr. Hall, Mr. Scott, Mr.
Carter, MSSTA, and AST tentatively agreed that AST would pay ap-
proximately $800,000 for MSSTA's assets, $600,000 of which AST
would pay directly to MSSTA and $200,000 of which AST was willing
to reflect, along with an additional amount, as a payment to be
made by AST directly to Mr. Carter under an agreement by him to
consult and not to compete with AST. They also tentatively
agreed that Mr. Carter and the Scotts would receive from MSSTA
liquidating distributions, based on their respective stock own-
ership of MSSTA, of the $600,000 balance of the $800,000 that AST
was willing to pay MSSTA for its assets and that the Scotts would
use money that they would receive from MSSTA in such liquidating
distributions to assist them in purchasing stock in AST.
During the negotiations among Mr. Harrison, Mr. Hall, and
Mr. Scott, Mr. Scott asked Mr. Hall what the tax consequences
would be to MSSTA and the Scotts as a result of the foregoing
tentative agreements that they had reached about the MSSTA
transaction. Mr. Hall responded that (1) MSSTA's tax liability
would be approximately $100,000 if it reported the $600,000 that
AST had tentatively agreed to transfer to it as the amount re-
alized from the sale of its assets; (2) there would be no tax
consequences to MSSTA as a result of AST's payment directly to
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