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dividends or cash payments to him or herself or other
family members shall not be an active participant nor
retain ownership. * * * A non-active family member-
owner may designate his or her spouse who does work
full time in the business to be considered for
qualification of the family member-owner as an active
participant. * * *
B. First Transfers of Interests in Belle Fourche, True Oil,
and True Drilling to True Children
In the early 1970's, the True children acquired interests in
three True companies: Belle Fourche, True Oil, and True
Drilling. Dave True’s purpose in enabling his children to
acquire these interests was to perpetuate the family businesses
by fostering the children’s interest in owning and managing them.
Dave True was in good health in 1971 and 1973 when he
orchestrated these acquisitions by his children.
In August 1971 (as described supra pp. 17-18), Belle Fourche
sold stock, representing a 1-percent ownership interest, to each
True child for a combination of cash and loans made to the
corporation by the child.12 At that time, the True children
ranged from approximately 21 to 31 years of age. The purchase
price ($38.69 per share) was based on Belle Fourche’s book value
as of the end of the preceding fiscal year, less dividends paid
within 2-1/2 months thereafter. Subsequently, the stockholders
12Mr. Harris testified that Dave True sold 1-percent
interests in Belle Fourche to each of his four children.
However, the minutes of the Belle Fourche Board of Directors
meeting and the SRC appraisal indicate that the company sold its
stock to the children.
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