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considerations, we find that the B. Allen report was obtained
primarily in anticipation of litigation and was not relied on by
the parties to arrive at the buy-sell agreement’s formula price.
First, because Dave True only obtained a contemporaneous
appraisal of True Oil’s assets, it is clear that the parties did
not rely on appraisals before adopting the other True companies’
buy-sell agreements. Second, as illustrated in the SRC report
(which was not available, however, at the time of the gift), the
appraised value of the reserves showed a significant disparity
between tax book value ($54,653) and fair market value ($535,000)
of an 8-percent interest in the assets of True Oil. Even without
the benefit of the SRC report, petitioners should have assumed
that almost $10,000,000 of unbooked asset value would increase
the market price of an interest in the partnership. There is no
evidence in the record of any attempt to reconcile this
difference, except for Mr. Harris’s rationalization that the
unbooked reserve value would be consumed over time to fund oil
and gas exploration. Third, petitioners have failed to show that
the True children reviewed the report in detail before executing
the True Oil buy-sell agreement, or that it made any difference
in the terms of the agreement or their entry into it.
Our impression is that Dave True was predisposed toward
using a tax book value formula because he had used it before in
his buy-sell agreements with Jean True, and because he saw it as
a relatively quick and easy way to determine price. He presented
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