Al Zuni of Arizona, Inc. - Page 10




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          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 percent             
          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.                                


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