Robert Dallas - Page 3

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          DGA stock was $751 per share on November 29, 1999, and $801 per             
          share on November 29, 2000.                                                 
               2.  Whether the value of each 1999 note was $2,232,000, as             
          petitioner contends, or $1,687,704 as respondent determined.  We            
          hold that it was $1,687,704.                                                
               Unless otherwise specified, section references are to the              
          Internal Revenue Code as in effect for 1999 and 2000, and Rule              
          references are to the Tax Court Rules of Practice and Procedure.            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          A.   Petitioner                                                             
               Petitioner resided in Whitehouse, New Jersey, when he filed            
          the petition in this case.  He was 84 years old at the time of              
          trial.                                                                      
          B.   Dallas Group of America                                                
               1. Reagent Chemical & Research., Inc.                                  
               In 1959, petitioner and Thomas Skeuse (Skeuse) formed                  
          Reagent Chemical & Research, Inc. (Reagent), in Texas.  Reagent             
          initially processed elemental sulfur and later distributed                  
          hydrochloric acid.  In the 1970s, Reagent expanded into the                 
          ammonium chloride and magnesium silicate businesses.                        
               2.   Formation of Dallas Group of America, Inc.                        
               In February 1989, petitioner and Skeuse decided to split               
          their interests in Reagent.  Reagent spun off its ammonium                  






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