- 10 - Income of $133,413 Charged to Al Zuni Section 336(a) provides generally that gain or loss is to be recognized by a corporation on distribution of its property in complete liquidation. The gain is to be computed based on the fair market value of the property distributed over the corporation’s cost basis in the property. Fair market value is defined as the price at which property would change hands between willing buyers and sellers, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); Collins v. Commissioner, 3 F.3d 625, 633 (2d Cir. 1993), affg. T.C. Memo. 1992-478; Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). On the evidence before us in these cases, the best indication of the fair market value of the jewelry inventory transferred to Khalaf is found in the representations of value set forth in Al Zuni's and in American Silver’s documentation relating to the transaction at issue in these cases, particularly the minutes of Al Zuni’s September 15, 1992, board of directors’ meeting which reflect a value for the jewelry inventory transferred to Khalaf of $671,413. At trial, Khalaf opined generally as to the decline during the 1980's in the value of Native American jewelry to the effect that such jewelry purchased in the early to mid-1980's would, in 1998 (at the time of the trial), be worth only 10 to 30 percentPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011