- 33 -
1 day. No bona fide negotiations occurred with respect to the stock
price, as Mr. Hughes and his law firm represented all parties to the
Buy-Sell Agreement. Instead, the parties selected a value of
$11,333.30 per share, a price which was approximately $4,000 less
than the value decedent had reported for every gift of CamVic stock
he made between 1972 and 1974.
In Estate of Lauder v. Commissioner, T.C. Memo. 1992-736, which
was similar in this respect, we found that a restrictive stock
agreement was intended as a substitute for a testamentary
disposition. In Estate of Lauder, we explained:
We are most concerned with the arbitrary manner in which
Leonard, an experienced businessman, adopted the adjusted
book value formula for determining the purchase price of
the stock under the agreements. Leonard admitted that he
arrived at the formula without a formal appraisal and
without considering the specific trading prices of
comparable companies. Nor does it appear that Leonard
obtained any significant professional advice in selecting
the formula price. Leonard settled on the book value
formula himself after consulting with Arnold M. Ganz (a
close family financial adviser now deceased). * * *[23]
No revaluation of CamVic stock occurred in 1981 prior to
execution of the Revised Agreement. Rather, the parties to the
Revised Agreement simply reiterated the $11,333.30 price. Notes of
an attorney with Santen, Santen & Hughes in 1981 indicate that the
23In contrast, we note that CamRon's and Ferguson's Stock
Retirement Agreements provided for periodic reevaluation of the
stock price, and the majority shareholders of these corporations,
i.e., CamVic and CamRon, respectively, were not parties to these
agreements.
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