- 14 -
159. But we cannot do that here because Jasiak and petitioner
intended there to be no payment for Jasiak's promise not to
compete.
Petitioner did not offer any evidence to show the fair
market value of the stock. Instead, petitioner contends that
$10,000 is the book value of Jasiak's Cost Less stock. We
disagree that it is appropriate to use $10,000 as the fair market
value of Jasiak's Cost Less stock. First, Jasiak rejected
petitioner's offer to sell the stock for book value, which
suggests its fair market value was higher. Second, petitioners
offered no convincing evidence that the book value of Cost Less
stock was $10,000. Bailey testified that the book value and par
value of Cost Less were both "about" $1 per share, for a total of
$10,000. Petitioners offered no records or other corroboration
for this point. Bailey's explanation how he computed book value
was unconvincing. He testified that par value4 was $1 per share,
and that this was also its book value.5 We are not convinced
from Bailey's testimony that the book value of a share of Cost
4 Par value is an arbitrary value assigned to a share of
stock by the corporation's charter. See Kohler, Kohler's
Dictionary for Accountants 374 (5th ed. 1983); Nickerson,
Accounting Handbook for Nonaccountants 176 (1975).
5 The book value of a share of common stock is equal to
assets of the corporation less liabilities divided by the number
of outstanding shares. See Kohler, supra at 71.
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