- 143 -
than taken into account and given some effect, as in Estate of
Hall. See infra p. 153.
An important factor that supports our conclusion in these
cases and distinguishes Estate of Hall is the profound difference
between the tax book value formula in the True family buy-sell
agreements and the adjusted book value formula in Estate of Hall.
Book value in the cases at hand is income tax basis book value,
which gives effect to the income tax subsidies for the oil and
gas and cattle industries, and accelerated depreciation, which
have the effect of substantially reducing book value as compared
with book value determined under generally accepted accounting
principles. “Adjusted book value” in Estate of Hall was book
value using financial statements prepared in accordance with
generally accepted accounting principles, adjusted to reflect the
value of intangibles arising from above-average earnings. In
contrast, the tax basis book value formula in the True family
buy-sell agreements ignores all intangibles, which, Lauder II
indicated, suggests that an unadjusted book value formula has a
testamentary purpose. It ignores the current “discovery value”
of proven reserves, which would increase the price that a well-
informed buyer would be willing to pay. It even ignores historic
actually paid for costs, such as drilling costs and exploration
expenditures attributable to proven reserves, and feed expense
and other costs of homeraised calves that would enter into cost
of goods on hand under generally accepted accounting principles,
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