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qualify under the reorganization provisions of the Internal
Revenue Code.
Valuation of MB Parent Common Stock
Petitioner argues that Times Mirror and Reed “conclusively”
agreed that the MB Parent common stock was worth $1.375 billion.
In the context of the entire agreement, however, the description
of the consideration in the merger agreement as common stock was
merely a recital consistent with the intended tax effect. We
have examined the corporate governing documents to determine
whether the MB Parent common stock possessed the requisite value
for purposes of section 368(c). Cf. Alumax Inc. v. Commissioner,
109 T.C. 133, 177-191 (1997), affd. 165 F.3d 822 (11th Cir.
1999).
The factual analysis of the transaction compels the
conclusion that the management authority over the cash in the LLC
had far more value to Times Mirror than the MB Parent common
stock and thus represented the bulk of the consideration. For
completeness, we discuss briefly the expert testimony and the
context of petitioner’s effective concession that the MB common
stock and the management authority over the LLC were inseparable,
which we conclude establishes that common stock was not the sole
consideration for the Bender transaction.
Petitioner’s expert, Michael Bradley (Bradley), used a “net
asset value approach” to determine that MB Parent’s common stock
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