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Huntsman that a buyer would not pay more for stock based on the
corporation's ownership of life insurance if the proceeds would
be largely offset by the corporation’s liabilities. Id. at 875.
That is the case here.
In Estate of Clarke v. Commissioner, supra, we held that, in
valuing the stock of a corporation, the taxpayer’s experts’ erred
in not including the insurance policy on the life of the deceased
taxpayer under which $39,675 was paid to the corporation.
In Estate of Clarke, the corporation was not required to pay
the proceeds to the taxpayer’s estate. In contrast, in the
instant case, the life insurance proceeds were paid to the
corporation, but they could not be used for working capital
because they were to be paid to decedent’s estate.
We conclude that the $5 million insurance proceeds do not
increase the value of decedent’s CSB stock. We also conclude
that the fact that CSB was the beneficiary of and owned the
insurance proceeds does not determine whether CSB and decedent
agreed that payment was made solely to redeem his stock, as
petitioner contends, or partly to redeem his stock and partly
for any claim for cases or work in process, as we have found.
E. The Value of Decedent's CSB Stock on June 30, 1988
Petitioner contends that decedent's stock was worth
$5,556,6158 when he died on June 30, 1988. Respondent contends
8 Petitioner computes the value of decedent’s stock as
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