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SWMG physician received payment for the tangible assets of his or
her medical practice equal to the appraised value determined by
Narvco. The aggregate amount paid by SMF for the tangible assets
of the SWMG physicians' practices was $1,156,733.
5. Allocation of Value of Intangibles
SWMG entered into a further retainer agreement with Houlihan
on June 14, 1995, pursuant to which Houlihan would provide an
opinion "with respect to the appropriateness of the allocation of
the intangible value [of SWMG] among the individual shareholders
of SWMG pursuant to * * * the Asset Purchase Agreement [APA]
between SWMG and Sutter Health." No such opinion is in the
record. Earlier, in an October 11, 1994, letter, Houlihan had
advised Dr. Silva (chairman of the SWMG steering committee) that
an allocation could be made upon one, or a combination, of the
following three methods: On the basis of each physician's
contribution to revenue, on the basis of each physician's
contribution to income, or on the basis of each physician's
roster of active patients.
The formula for allocating each SWMG physician's
proportionate share of the estimated intangible value of SWMG was
devised, however, not by Houlihan but by one of petitioners;
namely, Dr. Levin. Dr. Levin described his allocation, to be
used by each SWMG physician for purposes of calculating his or
her charitable contribution deduction arising from the "bargain
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