Mark J. Steel and Connie J. Steel - Page 14




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          strong proof rule applies only in the case of an unambiguous                
          agreement.  Gerlach v. Commissioner, 55 T.C. 156, 169 (1970);               
          Estate of Hoffman v. Commissioner, T.C. Memo. 2001-109.                     
               In the stock sale agreement, Norway and petitioners agreed             
          to a $9 million purchase price for the stock.  The agreement                
          states:  “The Purchase Price for the Shares shall be Nine Million           
          Dollars”.  The agreement does not disclose any additional                   
          consideration owing from Norway to petitioners, except for                  
          certain adjustments to be made to the purchase price following              
          the completion of an audited financial statement.  Further, the             
          payment terms are very explicit and do not mention the lawsuit or           
          any settlement proceeds.  See appendix A.  We find that the stock           
          sale agreement was unambiguous regarding the allocation of                  
          consideration.  The provision of the agreement which authorized             
          the assignment of the lawsuit to petitioners does not treat the             
          lawsuit, or any proceeds therefrom, as additional consideration             
          from Norway.  Indeed, that provision and the assignment agreement           
          effectively sever BFI’s and Norway’s relationship to the lawsuit.           
               Other documents in the record indicate that the parties did            
          not contemplate that the settlement proceeds be viewed as                   


               10(...continued)                                                       
          party, challenge the allocation for tax purposes.”  However, the            
          Court of Appeals for the Ninth Circuit, to which this case is               
          appealable, has yet to adopt this standard.  We shall, therefore,           
          apply the strong proof rule.  Elrod v. Commissioner, 87 T.C.                
          1046, 1065-1066 (1986).                                                     





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