- 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 NextLast modified: May 25, 2011