- 13 -
312, 335 (1989). The willing buyer and the willing seller are
hypothetical persons, instead of specific individuals or
entities, and the characteristics of these imaginary persons are
not necessarily the same as the personal characteristics of the
actual seller or a particular buyer. Estate of Bright v. United
States, 658 F.2d 999, 1005-1006 (5th Cir. 1981); Estate of
Newhouse v. Commissioner, supra at 218.
Special rules govern the valuation of corporate stock. When
stock is listed on an established securities market, the stock's
value usually equals its listed market price. When stock is not
listed on an established securities market, the stock’s value is
usually based on arm's-length sales (if any) that have occurred
within a reasonable time of the valuation date. In the absence
of any such arm’s-length sales, the value of unlisted stock is
based on the value of listed stock of the subject corporation,
or, if the corporation has no listed stock, the listed stock of
like corporations engaged in the same or a similar line of
business.9 Unlisted stock must also be valued by reference to
the subject corporation's net worth, its prospective earning
power, its dividend-earning capacity, its goodwill, its
management, its position in the industry, the economic outlook
for its industry, the degree of control represented by the block
9 Like corporations are determined by reference to the
subject corporation's age, business (e.g., manufacturer,
retailer), product line, and gross receipts.
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