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non-marketable, minority blocks of shares."5 Decedent’s Form 709
shows that the value of $34.84 per voting share as of April 12,
1991 (the date of the gift), was ascertained by: (1) Starting
with a value of $30,500 per voting share as of August 31, 1989,
as stated in the 1989 report, (2) adjusting that value for a
1000-for-1 stock split in June 1990, yielding a value of $30.50
per share, and (3) increasing the latter figure by $4.34, to
reflect an increase in book value per voting share from
December 31, 1989, until December 31, 1990.
On February 1, 1992, a Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, was filed on
petitioner’s behalf. Petitioner’s Form 706 reported the
date-of-death value of Decedent's Eatel stock at $35.20 per
share. This amount was based on a two-page valuation report of
C & A, signed by Mr. Chaffe on October 21, 1991 (1991 report).
C & A prepared the 1991 report by relying heavily on its 1989
report. The 1991 report also states that C & A: (1) Reviewed
Eatel’s certified financial statements for its calendar years
ended December 31, 1989 and 1990, as well as Eatel’s uncertified
financial statements for the 7-month period ended July 31, 1991,6
(2) discussed with Eatel’s president Eatel’s past, present, and
future business decisions, as well as the state of the
5 The 1989 report states that DATA has 21 shareholders.
6 C & A also looked at the relevant financial statements of
Eatel’s subsidiaries.
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