- 13 - Petitioners contend that the distribution of the lawsuit was “integrally related” to the stock sale, and the lawsuit should be treated as received by petitioners as part of the sale of their BFI stock. Respondent, on the other hand, argues that the distribution of the lawsuit and the sale of the stock were separate transactions. Assuming arguendo that petitioners are not bound to the form of the transactions chosen, petitioners cannot ignore the unambiguous terms of a binding agreement unless they present “strong proof”, which is more than a preponderance of the evidence, that the terms of the written instrument do not reflect the actual intentions of the contracting parties. Ullman v. Commissioner, 264 F.2d 305, 308-309 (2d Cir. 1959), affg. 29 T.C. 129 (1957); Norwest Corp. & Subs. v. Commissioner, 111 T.C. 105, 142 (1998). And, generally, where a taxpayer asserts that an allocation of consideration is other than that specified in a contract, we have held that the taxpayer must present “strong proof” that the asserted allocation “is correct based on the intent of the parties and the economic realities.” Meredith Corp. & Subs. v. Commissioner, 102 T.C. 406, 438 (1994).10 The 10Several Courts of Appeals have applied the more stringent standard enunciated in Commissioner v. Danielson, 378 F.2d 771, 777 (3d Cir. 1967), vacating and remanding 44 T.C. 549 (1965): where a specific allocation of consideration is contained in a written agreement, the taxpayer “may not, absent a showing of fraud, undue influence and the like on the part of the other (continued...)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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