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Oliver's shareholders rather than its board of directors. Concern about the size of the block of common stock also prompted White Motor to require inclusion of the following provision in the agreement itself:

39. The Oliver Corporation agrees, promptly after the execution of this Agreement, to prepare and file with the Internal Revenue Service a request for a ruling that distribution of the Common Stock of the White Company to be issued to The Cleveland Trust Company under the provisions of this Agreement, pro rata to the stockholders of The Oliver Corporation (but subject to adjustment by cash or scrip for fractional shares), will qualify as a partial liquidation of The Oliver Corporation and that the stockholders of The Oliver Corporation, upon their receipt of their respective shares of such stock of the White Company, will not be deemed to have realized distributions taxable as ordinary income. The Oliver Corporation agrees to use its best efforts to obtain such a ruling, and in the event such a ruling is received, The Oliver Corporation agrees to take all steps necessary to be taken by it to cause such distribution to its stockholders within two (2) months after receipt of such ruling, or seven (7) months after the delivery of such stock of the White Company to The Cleveland Trust Company, whichever is later.

Old Oliver and White Motor closed the agreement on October 31, 1960, after a vote of approval by the shareholders of both corporations. At the closing Old Oliver transferred the assets specified in the agreement to White Motor. Old Oliver's final book values for such assets were as follows:

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Also on October 31, 1960, White Motor delivered 655,000 shares of its common stock to the trustee in accordance with the trust provisions of the agreement. In addition, White Motor paid Old Oliver $1,508,550 in cash and assumed $281,396 in liabilities on the farm equipment assets transferred to it.

On November 1, 1960, White Motor transferred the Oliver farm equipment business which it had received under the agreement to New Oliver in exchange for New Oliver's common stock. New Oliver's tax basis in the farm equipment business on November 1, 1960, was the same as White Motor's tax basis.

Both White Motor and New Oliver initially recorded the acquisition of Old Oliver's farm equipment business at a total cost of $23,784,687.50 on their books of account. This cost was derived by valuing the 655,000 shares of White Motor common stock at $36.3125 per share, the average price of White Motor common stock on the New York Stock Exchange on October 31, 1960.

White Motor's initial entries were reversed sometime in January 1961, before the books were closed for the calendar year 1960, and the final entries recorded the farm equipment business at a cost reflecting a value of $48.50 for each share of White Motor common stock. The initial entries were changed at the suggestion of White Motor's tax department and its independent certified public accountants. The following language is from a memorandum dated January 4, 1961, in the files of White Motor's accountants:

In Note C (2) of notes to the pro forma consolidated balance sheet included in The White Motor policy [sic (proxy)] statement of October 10, 1960, White stated that the stock issued in the acquisition would be recorded at market value on the closing date. The question was raised as to SEC's position as White records the stock at $48.50. * * * there should be no problem, and if a question is raised White could state that at the time of the policy [sic (proxy)] statement the values had not been determined, and that on advice of consul [sic] a statement was included in the proxy statement that the adjustment would be made to the market value. Subsequent to the date of the proxy statement consul [sic] has advised White that the $48.50 value per share is proper for both accounting and tax purposes.

New Oliver prepared its Federal income tax returns for 1960, 1961, and 1962, on the basis that the assets received under the agreement had been acquired in exchange for White Motor common stock having a value of $48.50 per share.

Old Oliver recorded the block of White Motor common stock on its books at a total value of $23,784,688, or $36.3125 per share. It also valued the stock at $23,784,688 in reporting a loss on the sale of its farm equipment business in its Federal income tax return for 1960.

On December 9, 1960, and again on March 23, 1961, Old Oliver requested a ruling from the Internal Revenue Service with respect to the

distribution of its 655,000 shares of White Motor common stock to its shareholders, and received favorable rulings. Pursuant to a plan of partial liquidation adopted by its shareholders on June 30, 1961, approximately 653,770 shares of the block of 655,000 shares were either distributed directly to the Old Oliver shareholders or sold on the market and the proceeds made available to the shareholders. The remainder of approximately 1,230 shares of White Motor common stock not so distributed or sold was held by Old Oliver as an investment.

White Motor common stock had been listed on the New York Stock Exchange for many years prior to October 31, 1960. On October 31, 1960, immediately prior to the issuance of the block of 655,000 shares of White Motor common stock, White Motor had outstanding 2,112,157 shares of common stock and 55,108 shares of $100 par value preferred stock. During the years 1959, 1960, and 1961, the number of White Motor common shares traded on the New York Stock Exchange totaled 472,500, 444,000, and 622,600, respectively. The trading volume in White Motor common stock on the New York Stock Exchange over the first 10 months of 1960 was reported as follows:

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The average monthly trading volume over this period was approximately 33,650. On October 31, 1960, 3,300 shares of White Motor common stock were traded on the New York Stock Exchange.

On October 31, 1960, the price of White Motor common stock on the New York Stock Exchange was at the lowest point it reached at any time during the 3 years 1959, 1960, and 1961. The monthly trading highs and lows of White Motor's common stock on the New York Stock Exchange during these 3 years were as follows:

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Adjusted to reflect 100-percent stock split in March 1959 and 5-percent stock dividend in January 1960.

55.00

57.26

59.76

66.75

46.67 45.000
51.90 42.625 36.000
56.43 39.750 36.750
60.50 43.000 37.000

39.625

53. 125

48.500

52.500

45.500

51.875

45.500

54. 625

50. 625

The low price of White Motor common stock during October 1960 was due in part to an overall decline in the stock market. Factors causing the decline in the market were the poor performance of the national economy during the third quarter of 1960, and the uncertainty about the outcome of the upcoming presidential elections in November 1960.

OPINION

On October 31, 1960, White Motor purchased the farm equipment business of Old Oliver (including the Oliver trade name) in exchange for 655,000 shares of White Motor common stock (White stock), $1,508,550 in cash, and the assumption of $281,396 in liabilities. Old Oliver immediately changed its corporate name to Cletrac Corp., and on November 1, 1960, White Motor transferred the Oliver farm equipment business to its wholly owned subsidiary, New Oliver, in a nontaxable exchange. Petitioner White Farm Equipment Co. (White) is the successor-in-interest to White Motor and New Oliver, and petitioner Amerada Hess Corp. (Hess) is the successor-in-interest to Old Oliver.

We are asked to decide the value to be placed on the block of 655,000 shares of White stock for the purposes of (1) determining the extent of Old Oliver's original loss and Hess' carryover loss from the sale of the farm equipment business and (2) determining White's tax basis in the farm equipment business. Old Oliver's loss on the sale of its farm equipment business is measured by the excess of its adjusted basis over the sum of the money received plus the fair market value of other property (essentially the shares of White stock) received. Sec. 1001 (a) and (b). White's basis in the farm equipment business is the cost of such property, cost being the amount paid for such property in cash or other property. Sec. 1012; sec. 1.1012-1 (a), Income Tax Regs. Since "the amount paid" by White included "other property" (the shares of White stock) it is necessary to determine the value in dollars of that stock.

Hess has argued for a valuation of approximately $20 million (slightly more than $30 per share) in order to maximize its carryover loss, and White has argued for a valuation of $31,767,500 ($48.50 per share) in order to maximize its tax basis. Respondent is essentially a stakeholder in this case and his primary concern is that we deal consistently with both petitioners. On brief, however, respondent has supported the arguments made by Hess.

We hold that the value to be placed on the block of White shares is, as petitioner White has argued and as set forth by the parties in their agreement, $31,767,500 ($48.50 per share).

1 All statutory references are to the Internal Revenue Code of 1954, unless otherwise specified.

The agreement between White Motor and Old Oliver expressly stated that it represented the entire agreement between the parties as follows:

This Agreement contains the entire Agreement between the parties hereto with respect to the transactions herein contemplated, and supersedes all prior agreements or understandings between the parties hereto relating to the subject matter hereof.

Payment of the assets purchased by White Motor was provided for in the agreement in pertinent part as follows:

7. * * * the White Company agrees to pay to The Oliver Corporation for all of the properties and assets hereinabove described * ** a sum which is equal to the sum of [the various percentages of book value of the assets to be acquired]

8. The purchase price hereinabove provided for in paragraph 7 shall be paid as follows: The sum of Thirty-one Million Seven Hundred Sixty-seven Thousand Five Hundred Dollars ($31,767,500) shall be paid by the White Company by the delivery, on the Closing Date *** of certificates for six hundred fifty-five thousand (655,000) shares of the Common Stock of the White Company *. As soon as practicable after the Closing Date, the purchase price of the properties and assets *** shall be computed * * * and thereupon the White Company shall forthwith pay to The Oliver Corporation the unpaid balance, if any, of said purchase price, as so computed * * *. If the said computation shall show that the purchase price is less than Thirty-one Million Seven Hundred Sixty-seven Thousand Five Hundred Dollars ($31,767,500), The Oliver Corporation shall forthwith pay to the White Company by the Oliver Corporation's check the difference between the said purchase price and the said sum of Thirty-one Million Seven Hundred Sixty-seven Thousand Five Hundred Dollars ($31,767,500). [Emphasis supplied.]

It is clear from the foregoing provisions that the parties agreed that White Motor would pay the sum of $31,767,500 of the purchase price by the delivery of 655,000 shares of its common stock, thereby placing a value on the stock of $48.50 per share.

Assignments of value to property by parties with adverse interests in a transaction are regarded as strong evidence by the courts in determining fair market value of the property because fair market value by definition is "the price which property will bring when offered by a willing seller to a willing buyer, neither being obligated to buy or sell." Elmhurst Cemetery Co. v. Commissioner, 300 U.S. 37, 39 (1937); see In Re Williams' Estate, 256 F. 2d 217, 218 (C.A. 9, 1958), affirming a Memorandum Opinion of this Court.

In two cases strikingly similar to the instant case, Moore-McCormack Lines, Inc. (Mooremac), 44 T.C. 745 (1965), and its companion case Seas Shipping Co., Inc. (Seas), T.C. Memo. 1965-240, affd. 371 F. 2d 528 (C.A. 2, 1967), certiorari denied 387 U.S. 943 (1967), the issue before this Court was the valuation of $300,000 shares of Mooremac's

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