Gerald A. and Henrietta V. Rauenhorst - Page 32




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               In support of respondent’s position that the right to sale             
          proceeds had “ripened to a practical certainty” at the time of              
          the contributions, he cites:  (1) The September 28, 1993, letter            
          of intent from WCP expressing its intention to purchase all the             
          issued and outstanding stock of NMG; (2) the October 22, 1993,              
          resolution by WCP’s board of directors, which authorized its                
          officers to negotiate and enter into the agreement for the                  
          purchase of all the issued and outstanding capital stock of NMG;            
          and (3) a valuation report prepared by Houlihan, Lokey, Howard, &           
          Zukin (Houlihan Lokey), which was attached to petitioners’ 1993             
          return and which opined that, as of November 12, 1993, there was            
          little chance the transaction involving WCP would not close on or           
          before December 31, 1993.  Those items might be particularly                
          relevant for determining whether the stock warrant purchase                 
          ripened to a practical certainty; however, none of those items              
          alone, or in combination, show that the donees were legally                 
          bound, or could be compelled, to sell their stock warrants.                 
               The letter of intent merely confirms WCP’s “intention * * *            
          to purchase all of the issued and outstanding shares of the                 
          capital stock of N.M.G., Inc., * * * from the stockholders of the           
          Company”; however, it was not an offer to purchase those shares             
          as respondent claims.  Although the letter of intent outlines the           
          terms and conditions of the proposed purchase and sale of stock,            
          including the aggregate purchase price and the repayment of                 






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