- 12 - weighed MD&F’s earnings, and placed too much emphasis on Mr. DiSanto's role in MD&F. 2. Whether We Consider the 1995 Redemption of MD&F Stock Respondent contends that the 1995 redemption is persuasive evidence of the fair market value of Mr. DiSanto’s MD&F stock because it resulted from arm’s-length negotiations. We disagree. We believe that Fred DiSanto caused MD&F to pay more than fair market value to redeem his brother’s stock because he wanted to provide benefits to his brother’s family and also to continue to provide employment for other family members. Fred DiSanto credibly testified that he caused MD&F to overpay to redeem the stock in 1995. Other MD&F employees disagreed with his decision to redeem the stock for $26.81 per share. The redemption was emotional for the DiSanto family. Emotional factors may preclude a redemption price from representing fair market value. See, e.g., Krapf v. United States, 977 F.2d 1454, 1461 (Fed. Cir. 1992) (intrafamily sale of stock to company founder who would go to great lengths to secure survival of the distressed company was not reliable evidence of fair market value). Respondent points out that negotiations occurred and that Pope represented the DiSanto children. However, those facts do not negate the emotional factors that, we believe, led Fred DiSanto to agree to an excessive redemption price. We give no weight to the 1995 redemption as evidence of fair market value of MD&F stock in 1992 and 1993.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011