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distribution.” Pope & Talbot, Inc. v. Commissioner, supra at
577. Because we were unable to answer with certainty the
question of what property interest had to be valued under former
section 311(d) after examining the statutory language, we
examined the legislative history and concluded that “the purpose
underlying section 311(d) was to tax the appreciation in value
that had occurred while the distributing corporation held the
property and to prevent a corporation from avoiding tax on the
inherent gain by distributing such property to its shareholders.”
Pope & Talbot, Inc. v. Commissioner, supra at 579.
We face a different dispute from that decided by this Court
in Pope & Talbot, Inc. I. In Pope & Talbot, Inc. I, we only
decided what property interest had to be valued for purposes of
section 311(d). In this case, the parties agree that the
property distributed by petitioner to its shareholders was the
Clinpath stock. The disagreement in this case relates only to
the valuation of that stock for purposes of section 311(b).
Although petitioner urges us to apply Pope & Talbot, Inc. I as a
limitation on our analysis of the fair market value of the
Clinpath stock, we must reject petitioner’s plea because
valuation was not the issue decided in Pope & Talbot, Inc. I.
Thus, our decision in Pope & Talbot, Inc. I is distinguishable.
In order to calculate the gain that petitioner must
recognize under section 311(b)(1), we must decide the fair market
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