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Revised Agreement was the percentage of stock ownership necessary to
change the terms of the agreement.
Petitioners argue that the original Buy-Sell Agreement was a
binding contract enforceable under Ohio State law. Respondent
maintains that section 20.2031-2(h), Estate Tax Regs., sets forth
the applicable standard for determining whether a restrictive stock
agreement is controlling for estate tax purposes. This regulation
provides that "Little weight will be accorded a price contained in
an option or contract under which the decedent is free to dispose of
the underlying securities at any price he chooses during his
lifetime." Sec. 20.2031-2(h), Estate Tax Regs.; see also Estate of
Matthews v. Commissioner, 3 T.C. 525, 528-529 (1944); Hoffman v.
Commissioner, 2 T.C. 1160, 1178-1179 (1943), affd. sub nom. Giannini
v. Commissioner, 148 F.2d 285 (9th Cir. 1945). Respondent asserts
that the original Buy-Sell Agreement was not binding on decedent
during his lifetime because he had the power to unilaterally alter
its terms. We agree.
The original Buy-Sell Agreement, executed in May 1975,
expressly provided that "This Agreement may be amended or altered by
the written consent of the holder of at least seventy-five percent
(75%) of the issued and outstanding shares of the Corporation."
Decedent owned a beneficial interest (via the CWB Trust) in 86
percent of CamVic's outstanding stock on the date the Buy-Sell
Agreement was executed and for the remainder of his life. This
beneficial interest included the right to vote the shares. Thus,
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