Opinion ID: 1612232
Heading Depth: 1
Heading Rank: 23

Heading: Fred Lockwood

Text: Fred Lockwood, a certified public accountant, testified on behalf of Shepherd and Corbet. Lockwood was given yield numbers for the yeast byproducts that were to be produced by the plant and asked to project future revenues. His trial testimony, however, was limited to testimony regarding average yeast prices during the years 1994 to 1997. On cross-examination, Lockwood admitted that he obtained the price numbers he testified to simply by calling individuals suggested by his attorney. In particular, Lockwood telephoned Wright, of Coors Bio-Tech, to investigate the price of brewers' yeast from 1994 to 1997, and concluded the average price was 37 cents per pound. The price listed on the pro forma projections and used by Raasch in his appraisal was 20 cents per pound. He also telephoned the manager of quality assurance at Burns-Phillips Ingredients, one of two manufacturers of torula yeast in the United States, and concluded that the average price per pound of torula yeast during the years 1994 to 1997 was $1, an amount greater than that used by Raasch in his appraisal. On cross-examination, Lockwood insisted he relied upon the yield numbers in the pro forma projections in making his calculations. Additionally, Lockwood testified on cross-examination that the cost basis of the capital assets in the project was approximately $14 million. On redirect, he testified that in a subchapter S corporation, any deductions for loss should be taken by the owners in proportion to their ownership interest. He testified that in the tax returns he saw, Roles alone took all of the losses for the corporation, which amounted to approximately $6 million. On recross, he clarified that an individual with no tax basis cannot presently take a loss, but it can be carried over into the next tax year.