Al Zuni of Arizona, Inc. - Page 11

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          of what it had cost.  Khalaf did not opine as to the general                
          value of such jewelry in 1992.                                              
               We note that at trial neither party provided timely                    
          independent expert witnesses as to the value of the jewelry                 
          transferred to Khalaf.  Even if experts had been called, due to             
          Al Zuni’s and Khalaf’s failure to have available a written                  
          inventory, books and records, or other documentation describing             
          the specific items of jewelry transferred to Khalaf, such experts           
          would not have had sufficient information to make professional              
          valuations of the jewelry inventory transferred to Khalaf, and              
          their testimony would not have been helpful.                                
               On the limited evidence before us (including petitioners'              
          and American Silver's written contemporaneous representations as            
          to the value of the jewelry, the evidence reflected on Al Zuni's            
          tax returns as to the cost of the jewelry inventory that Khalaf             
          purchased for Al Zuni in 1990, 1991, and 1992 in the $1 million             
          plus range and regarding the cost of the jewelry inventory Al               
          Zuni had on hand at yearend 1990 and 1991 in the one-half million           
          dollar range), we conclude that the value of the jewelry                    
          inventory transferred to Khalaf on September 15, 1992, was                  
          $671,413.                                                                   
               With regard to Al Zuni’s cost basis in the jewelry inventory           
          transferred to Khalaf on September 15, 1992, the parties                    
          stipulated that the jewelry inventory had a cost basis to Al Zuni           
          of $538,000.  Subtracting the $538,000 cost from the $671,413               




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