Estate of Robert E. Cartwright, Deceased, Dorothy G. Cartwright, Executrix - Page 20

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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                 
                                                             (continued...)           




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