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Agreement is to be taken into account in valuing the gross
estate. Accordingly, we must consider the nature of the interest
to be included in decedent’s gross estate.
As a general rule, the Internal Revenue Code imposes a
Federal tax “on the transfer of the taxable estate of every
decedent who is a citizen or resident of the United States.”
Sec. 2001(a). Such taxable estate, in turn, is defined as the
“value of the gross estate”, less applicable deductions. Sec.
2051. Section 2031(a) then specifies that the “value of the
gross estate of the decedent shall be determined by including to
the extent provided for in this part [sections 2031 through
2046], the value at the time of his death of all property, real
or personal, tangible or intangible, wherever situated.” In this
connection, section 2033 broadly states that the “value of the
gross estate shall include the value of all property to the
extent of the interest therein of the decedent at the time of his
death.”
Regulations further explain the valuation concept as
follows:
The value of every item of property includible in a
decedent’s gross estate under sections 2031 through
2044 is its fair market value at the time of the
decedent’s death * * * . The fair market value is the
price at which the property would change hands between
a willing buyer and a willing seller, neither being
under any compulsion to buy or to sell and both having
reasonable knowledge of relevant facts. * * * [Sec.
20.2031-1(b), Estate Tax Regs.]
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