- 14 - 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).Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011