2
Paul Brown was the chief operating officer of the Cincinnati
Bengals from 1967 to 1991. In 1983, he sold 117 of his 118
shares of Bengals stock to John Sawyer, who owned 213 shares of
Bengals stock. In exchange, Sawyer gave a $3.51 million note to
Brown and sold an option to Brown's sons to buy up to 329 shares
of Bengals stock; i.e., the 117 shares Brown sold to Sawyer and
212 of Sawyer's shares. The option could be exercised from 1993
to 1996. Paul Brown died in 1991. His sons exercised the option
in 1993 for 329 shares of stock. On Paul Brown's Federal estate
tax return, petitioner reported that Brown owned one share of
Bengals stock when he died. Respondent determined that his
estate includes 329 shares of Bengals stock. Respondent now
contends that Paul Brown's estate includes 312 shares of Bengals
stock.1
The issue for decision is whether Paul Brown's estate
includes 312 shares of Bengals stock, as respondent contends, or
one share, as petitioner contends. We hold that decedent's
estate includes one share of Bengals stock.
Section references are to the Internal Revenue Code of 1986.
Rule references are to the Tax Court Rules of Practice and
Procedure.
1 We explain respondent's contention that Brown's estate
includes 312 shares of Bengals stock at p. 33 below.
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