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fair market value of each 8% interest was properly
determined at $54,653.
Judgment was entered accordingly, and the United States did not
appeal.
Although members of the True family asserted at trial that
they believed that the book value buy-sell provisions were valid
and enforceable as a result of the favorable outcomes of the 1971
and 1973 gift tax cases, neither they nor Dave True engaged
counsel to advise them of the legal effects of those cases on
future transfers pursuant to the buy-sell agreements. In fact,
as described infra pp. 51-52, Dave True saw the 1993 transfers as
his opportunity to test the ability of the buy-sell agreements to
fix Federal gift tax value.
In preparing for litigation of the 1971 and 1973 gift tax
cases, Dave True obtained appraisals for the transferred
interests in Belle Fourche (valued as of August 2, 1971) and True
Oil (valued as of August 1, 1973) from Standard Research
Consultants (SRC). The SRC appraisals supported the True family
positions in the 1971 and 1973 gift tax cases.
After evaluating Belle Fourche’s historical performance,
along with overall economic and industry trends, SRC used the
earnings and book value approaches to derive a “freely traded
value” for the transferred stock. The earnings approach required
determining various price-earnings multiples for comparable
public companies, adjusting them for Belle Fourche’s unique
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