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Moreover, the True family sometimes chose not to use tax
book value pricing formulas in their dealings with unrelated
parties. Petitioners highlight the fact that unrelated
stockholders sold their stock in Belle Fourche to Dave and Jean
True (not pursuant to buy-sell agreements) at a book value price.
However, we note that one unrelated shareholder sold stock, which
amounted to 24 percent of the stock initially issued by the
corporation, for more than book value; in addition, the book
value used in buying out unrelated shareholders of Belle Fourche
was GAAP book value rather than tax book value. See supra p. 23.
Also, the White Stallion buy-sell agreement, which included
parties that would not be considered natural objects of Dave
True’s bounty (Dave True’s brother and his family), was the only
buy-sell agreement that departed from a pure tax book value
pricing formula (see “First Right of Refusal” provision described
supra p. 49). Similarly, the Toolpushers Employees’ Trust was
specifically exempted from Toolpushers’ buy-sell agreement, thus
allowing the Employees’ Trust to sell its shares back to the
company for more than book value. In an analogous situation, the
True Oil employee profit-sharing plan’s contribution formula
required intangible drilling costs (IDC’s), which were deducted
for tax book purposes, to be added back to determine annual
profits for the purpose of determining the employer’s
contribution obligations.
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