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was more appropriate to view the “distribution” as a part of the
related stock transaction. However, the facts of those cases are
distinguishable from the facts of this case.
In In re Steen, supra at 1403, the Court of Appeals for the
Ninth Circuit relied upon a finding that the stock sale agreement
stated a reduced purchase price and that this reduction was
attributable to a tax contingency provision contained in a
related agreement with the purchaser: “Further, the conclusion
may be fairly drawn that the tax contingency provision reflects
part of the purchase price for assets. Depending upon the taxes
paid, the value of those assets and the amount to be paid to the
vendors was correspondingly increased or diminished.” In the
instant case, the purchase price did not correlate to the amounts
actually recovered under the lawsuit. Under the stock sale
agreement, Norway agreed to pay $9 million to Bochica for the
stock. No matter the amount petitioners actually collected on
the insurance claim, the purchase price would not be adjusted.
Thus, if they collected zero on the lawsuit, Norway’s obligation
was to remain $9 million. Further, the parties did not agree to
any independent means of adjusting the purchase price if the
lawsuit was not distributed by BFI.12
12In In re Steen, 509 F.2d 1398 (9th Cir. 1975), the tax
contingency payments were paid by the purchaser of the stock. In
this case, neither the underlying lawsuit nor any proceeds
therefrom originated with Norway, either directly or indirectly.
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