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more credible because the sale involved the very asset we are
required to value by section 311(b)(1), and the sale took place
on the valuation date specified in section 311(b)(1); i.e., the
date the Clinpath stock was distributed to petitioner’s
shareholders.
We hold, therefore, that the fair market value of the
Clinpath stock on the date it was distributed to petitioner’s
shareholders equaled $5,530,000, the price negotiated and agreed
upon as the stock’s sale price to NHL.16 We also hold that
petitioner realized and must recognize gain of $5,424,985,
calculated by subtracting petitioner’s adjusted basis in the
stock, $105,015, from the fair market value of the Clinpath
stock, $5,530,000.
We have considered the remaining arguments of both parties
for results contrary to those expressed herein and, to the extent
not discussed above, find those arguments to be irrelevant, moot,
or without merit.
16In his notice of deficiency, the Commissioner determined
petitioner’s gain to be $5,494,985. This amount was calculated
by subtracting petitioner’s basis in the Clinpath stock,
$105,015, from the total consideration of $5,600,000 paid by NHL.
The portion of the sale price allocated to the covenants not to
compete, $70,000, was not subtracted from petitioner’s gain as
determined in the notice of deficiency. On brief, respondent
conceded that the $70,000 represented the fair market value of
the covenants not to compete and was not part of the value of the
14,399 shares of Clinpath stock.
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