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equal to the book value of her capital account in that
partnership as of the close of business on June 30, 1994, the day
before the day she gave notice of her intent to sell her
partnership interests.
The corporate buy-sell agreements provided:
The price of any shares sold hereunder shall be the book
value of the stock at the end of the preceding fiscal
year, less any and all dividends paid to the
Shareholders prior to the effective date of sale, plus
income computed in accordance with the Internal Revenue
regulations generally requiring allocation on a per
share, per day basis.
As applied to Jean True’s 1994 sales, the corporate buy-sell
agreements therefore provided that the sale price of stock was
equal to: (1) The book value of that stock as of the end of the
corporation’s fiscal year preceding June 30, 1994, minus (2) the
dividends (if any) paid from the end of that fiscal year to
June 30, 1994, plus (3) a pro rata share of the corporation’s
income for the fiscal year including June 30, 1994.
As shown by the foregoing citations to the buy-sell
agreements, the agreements did not provide for any adjustments to
be made to the formula prices on account of the income or loss
of, the dividends paid or distributions made by, or any change in
the value of a True company, after June 30, 1994.82
82Although the buy-sell agreements did not provide for any
price adjustments to be made on account of the True companies’
financial performance after June 30, 1994, the price paid for
some of Jean True’s stock may have been affected by post-June 30,
1994, events. The corporate buy-sell agreements required the
preceding fiscal year’s ending book value to be increased by a
(continued...)
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