- 26 -
note that decedent's son, Ronald, and Ronald's three children, i.e.,
those shareholders with interests presumably adverse to the
interests of an older majority shareholder, never had the ability by
themselves to prevent decedent from amending the Revised Agreement.
We view the Revised Agreement as an attempt to remedy an estate tax
problem, while at the same time allowing decedent to retain the
effective ability to alter the terms of the Revised Agreement.
For the foregoing reasons, we hold that neither the original
Buy-Sell Agreement nor the Revised Agreement was binding on decedent
during his lifetime. Nevertheless, even assuming that either
agreement is construed as binding, petitioners still would not
prevail because, as explained later, we believe that the Buy-Sell
Agreement and Revised Agreement were testamentary devices to
transfer decedent's interest in CamVic's stock to the natural
objects of his bounty.
Section 20.2031-2(h), Estate Tax Regs., provides, in relevant
part:
Even if the decedent is not free to dispose of the
underlying securities at other than the option or contract
price, such price will be disregarded in determining the
value of the securities unless it is determined under the
circumstances of the particular case that the agreement
represents a bona fide business arrangement and not a
device to pass the decedent's shares to the natural
19(...continued)
to the Buy-Sell Agreement. Had either CamVic or decedent
(through the CWB Trust) exercised the option rights to purchase
Marcella's shares, decedent would have controlled over 87.5
percent of the shares.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011