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plaintiffs’ stock would not have been necessary to prevent
competing demands among shareholders from imperiling petitioner’s
existence or to safeguard the manner in which petitioner had been
successfully conducting its business. Instead, the redemption,
had it occurred, would have been related to the family lawsuit,
an action that was filed against Emile and Louise and in which
the plaintiffs never made a claim for damages against
petitioner.19 The mere fact that the family lawsuit centered on
ownership of a minority interest in petitioner’s stock does not,
in and of itself, mean that petitioner’s redemption of that stock
would be a reasonable business need.20 Lambert & Associates v.
United States, 212 Ct. Cl. 71 (1976). Such is particularly true
here where a redemption of those shares would have satisfied the
personal obligations of Emile and Louise and where petitioner’s
operations were never disrupted or compromised during the
relevant years as a result of the family lawsuit. In this
regard, we distinguish factually the cases of Knight Furniture
Co. v. Commissioner, T.C. Memo. 2001-19, Oman Constr. Co., Inc.
v. Commissioner, T.C. Memo. 1965-325, and C.E. Hooper, Inc. v.
United States, 210 Ct. Cl. 615, 539 F.2d 1276 (1976), relied upon
19 We note that petitioner has acknowledged by virtue of its
concession, see supra note 2, that its directors had previously
used corporate funds to satisfy a personal liability of Emile and
Louise stemming from the family lawsuit. Haff considered the
lawsuit to be a personal matter between Richard and Susan, on the
one hand, and Emile and Louise, on the other.
20 Nor do we think that this proposition would be different
even if one or more of the plaintiffs were attempting to obtain
that minority interest in order to sell it.
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