On Motion for Rehearing.
DHS asserts that owing to the “complex and unpopular” nature of federal tax laws, this court has failed to apply them properly. In reality, DHS is invoking the “complexity” of the tax laws to obscure the issues of the case.
Appellant misstates our opinion by asserting that we concluded “that [lawful] taxes could properly be recovered as damages in this case. . . .” DHS has repeatedly injected this element of confusion in the case. We have made it clear that the company lawfully owed the tax. The tax amount, however, was based on DHS’ negligent (so the verdict found) allocation of sale price to $3 million to inventory versus only $675,000 to equipment. The award, moreover, is “compensation for DHS’ negligent advice that the company would owe a certain tax [$30,000] which advice Green relied upon in deciding to sell the business and but for which he would not have sold it,” and, “[t]he verdict was thus clearly not for the tax he lawfully paid, but for his loss in having sold the business with unanticipated tax consequences.” The award ($625,224) is obviously not a recovery of the lawful tax ($653,200); it is well within the claims for damages, including $264,000 in termination bonuses and $800,000 salary which Green gave up.
Appellant insists it is “irrefutable” that “as a matter of law” the company would ultimately have paid the same tax if it had not been sold. But Green’s evidence showed $653,200 in tax would not have been assessed if DHS had made a reasonable allocation to sale price of inventory and equipment. Moreover, while bargain purchase inventory profits obviously would have to be recognized for tax purposes if the company was not sold, the tax basis would “irrefutably” be different if the company continued to operate successfully and defer the profits as it had done; on a different tax basis, a $653,200 tax would *855not necessarily have to be paid.
Decided February 13, 1991 Rehearing denied March 6, 1991 Sutherland, Asbill & Brennan, John A. Chandler, John W. Bonds, Jr., Elizabeth V. Tanis, for appellant. Kidd & Vaughan, Charles M. Kidd, David N. Schaeffer, for appellee.Motion for rehearing denied.