John C. Archer and Nancy M. Archer - Page 6




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          413 (1940).  Petitioners did not pay any cash to settle the                 
          threatened lawsuit.  Thus, petitioners must prove how much they             
          paid in 1994 in the equivalent of cash to settle the threatened             
          lawsuit.  See Rule 142(a).                                                  
               2.   Whether Petitioners Paid $37,739 in 1994 To Settle the            
                    Threatened Lawsuit                                                
               Petitioners contend that the amount that petitioner paid to            
          settle the threatened lawsuit can be derived from the values                
          stated in the agreement and stipulated values for some of the               
          provisions of the agreement.2  We disagree.  PAYS benefitted from           
          six provisions in the agreement.  There is no stated or                     
          stipulated value for any of those provisions.  Petitioner                   
          benefited from nine provisions in the agreement, five of which              
          have a stated or stipulated value and four of which do not.                 
          Petitioners calculate the value of PAYS’ covenant not to sue                
          (item 5 under consideration received by petitioner in the chart             
          below) as follows:                                                          
          Consideration given by petitioner                 Amount                    
          1. PAYS stock                                     $92,039                   
          Consideration received by petitioner                                        
          1. Forgiveness of debt to PAYS                     12,500                   
          2. Release of debts to Henry Steen, Jr.,           37,000                   
          and Gates Steen                                                             


               2  Respondent contends that the settlement consists of two             
          separate agreements.  We disagree.  PAYS and petitioner prepared            
          and executed the settlement at the same time.  They signed the              
          settlement only at the end of page 5.  We doubt that they would             
          have agreed to either part without agreeing to both parts.  We              
          conclude that the settlement is one agreement.                              





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