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the sale of the stock in Birting Fisheries, Inc. to
Norway Seafoods.
o. Rather than derailing the entire sale of the
stock in Birting Fisheries, Inc., due to their
inability to arrive at a value for the claim which
would be reflected in the purchase price stated in the
Stock Purchase Agreement, Norway Seafoods and BOCHICA
Partners agreed that the claim itself would be
transferred to the owners of the stock in Birting
Fisheries, Inc. who were selling their stock to Norway
Seafoods, or to the designee of those shareholders.
p. The transfer of the claim to or for the
benefit of the shareholders of Birting Fisheries, Inc.
was intended by the parties to the Stock Purchase
Agreement as a solution to the problem of their
inability to agree upon the value of the claim for
inclusion in the financial statements of Birting
Fisheries, Inc. upon which the purchase price was to be
based.
Assuming we accept petitioners’ statements of fact as true, and
that the sale of stock to Norway precipitated the distribution of
the lawsuit by BFI, we cannot conclude that these factors require
the characterization petitioners suggest. See Nahey v.
Commissioner, 196 F.3d at 869. If anything, those factors group
this case with cases dealing with the distribution of unwanted
assets before a stock transaction. See, e.g., West v.
Commissioner, 37 T.C. 684 (1962); Coffey v. Commissioner, 14 T.C.
1410 (1950) (wherein we declined to treat corporate distributions
to the taxpayers as part of the purchase price for their stock).
If petitioners are correct that the substance of the
transactions herein is the receipt of the lawsuit as part of the
BFI stock sale, we must recognize that BFI first distributed the
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