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$2,298,161.25. That was the amount paid for the shares under the
1987 redemption agreement. The executors elected alternate
valuation, as provided for in section 2032.
Value of Decedent’s Shares
The value of decedent’s shares on the alternate valuation
date was $4,000,000.
OPINION
I. Introduction
A. Questions Presented
This case concerns the value for Federal estate tax purposes
of certain shares of stock in Fred C. Gloeckner & Co. (the
company) owned by decedent at the time of his death. The
executors of decedent’s estate valued those shares at
$2,298,261.25 on the estate tax return they filed. In the
statutory notice of deficiency, respondent determined that the
value of the shares (decedent’s shares) was $6,000,000. At
trial, however, respondent conceded that the value of decedent’s
shares was, at most, $4,580,000.
B. Arguments of the Parties
The executors claim that the value of decedent’s shares is
the value stated in the estate tax return because that is the
amount paid by the company pursuant to the 1987 redemption
agreement. They argue that the 1987 redemption agreement
established the fair market value of those shares because it was
a binding agreement entered into for a valid business purpose.
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