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the clinical laboratory assets contributed by petitioner to
Clinpath. At trial, Harry Joe Wells, Jr., an expert witness
called by petitioner, testified that the fair market value of the
clinical laboratory assets, including going-concern value, was
$1,040,000. Petitioner contends that the Clinpath stock could
not possess a value in excess of the fair market value of its
underlying clinical laboratory assets, given Clinpath’s status as
a new corporation with no operating history; therefore, the focus
of section 311(b) in this case should be the fair market value of
the clinical laboratory assets. Petitioner relies upon our
decision in Pope & Talbot, Inc. v. Commissioner, 104 T.C. 574,
579 (1995), affd. 162 F.3d 1236 (9th Cir. 1999), the first of
three decisions involving Pope & Talbot, Inc.,13 as support for
its position. Hereinafter, for clarity, we shall refer to the
relevant decision as Pope & Talbot, Inc. I.
In Pope & Talbot, Inc. I, the taxpayer corporation, pursuant
to a plan of distribution, transferred its timber and land
development properties and related assets located in the State of
Washington (collectively referred to as the Washington
properties) to a newly formed Delaware limited partnership
(partnership). The partnership’s initial partners were two newly
formed corporate general partners, which initially were owned
13See also Pope & Talbot, Inc. v. Commissioner, T.C. Memo.
1997-116, supplemented by T.C. Memo. 1997-399, affd. 162 F.3d
1236 (9th Cir. 1999).
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