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on a complete valuation of the business that Shircliff &
Associates had conducted in 1983 and on the recent draft
financial information that had been provided. Shircliff &
Associates formed the view that the business as a whole could be
sold for between $9,764,144 and $13,169,366.5
Pleadings
The initial petition alleges in relevant part:
The Commissioner erred by determining that the common
stock of Pepsi-Cola Alton Bottling, Inc. owned by the
Petitioner had a fair market value of $8,056,000.00 as
of May 1, 1987. [Emphasis added.]
Petitioner’s amended petition alleges:
4. The determination of gift tax set forth in the
Notice of Deficiency is based of the following errors:
(a) The Respondent erred by determining that
a deficiency in gift tax of $2,229,350 is due from the
Petitioner for the year ended December 31, 1987.
(b) The Respondent erred by determining an
increase of $5,056,000 in taxable gifts.
(c) The Respondent erred by determining that
the total amount of taxable gifts is $5,057,000.
(d) The Respondent erred by determining the
tax on total taxable gifts is $2,422,150.
(e) The Respondent erred by determining that
the redemption of the Petitioner’s stock of Pepsi-Cola
Alton Bottling, Inc. (“PCAB”) was a gift since the
redemption was fraudulently induced and resulted in
Petitioner being swindled out of the full value of her
PCAB stock.
(f) The Respondent erred by determining that
the redemption of the Petitioner’s PCAB stock was a
gift since the redemption constituted a bona fide,
arms-length transaction which proved to be a bad
bargain for the Petitioner.
5This was based on a range of values between $5.19 and $7
per case times 1,881,338 cases sold. The valuation worksheet
also shows a total valuation of $10,061,000.
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