Opinion ID: 343188
Heading Depth: 1
Heading Rank: 2

Heading: The Valuation of Stock Issue.

Text: 15 The tax court denied the taxpayers the capital loss deduction claimed on the sale of the Baxter Milling Company, rejecting the taxpayers' argument that the P & M Corp. preferred stock received from the buyers as part of the purchase price represented a nominal value of $1,000, rather than its book value of $67,500. The tax court in its discussion noted that the sale agreement specified a price of $87,500 for all the assets of Baxter Milling except the inventory. The individual buyers organized P & M Corp. contemporaneously with the transfer of assets from Baxter Milling Company to the new corporation. The corporate records of P & M Corp. reflected that the book value of the P & M preferred stock equalled its par value of $67,500. The tax court concluded: 16 The evidence supporting the fair market value of the Baxter Milling Service assets on the date of sale clearly supports the $87,500 negotiated sales price. Because both the buyer and seller were willing and not under any compulsion to buy or sell, it is clear that the remaining $67,500 of the sales price was satisfied with the preferred stock and we find that its value was $67,500. (Caligiuri, supra, 34 Tax Ct. Mem. at 1394.) 17 We have reviewed the record. This determination is not clearly erroneous. The testimony of taxpayers' expert expressing a valuation opinion of $1,000 for the preferred stock as of the date of sale did not bind the tax court, notwithstanding the Commissioner's failure to call its own expert witness to express an opinion on valuation. The question of valuation remained a fact question, Rubber Research, Inc. v. Commissioner, 422 F.2d 1402, 1405 (8th Cir. 1970), and we find no basis to set aside the tax court's findings as clearly erroneous. Comm'r v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960). 18 Affirmed.