Irene Eisenberg - Page 10

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          because it is unlikely they will ever be incurred."  Estate of              
          Andrews v. Commissioner, supra at 942 (emphasis added).                     
               In sum, the primary reason for disallowing a discount for              
          capital gain taxes in this situation is that the tax liability              
          itself is deemed to be speculative.  Specifically, in the above             
          cases, there was a failure to show the requisite likelihood that            
          the beneficiaries would liquidate the corporation or sell the               
          underlying assets and incur the tax and other expenses.  Further,           
          there was no showing that a hypothetical willing buyer would                
          desire to purchase the stock with the view toward liquidating the           
          corporation or selling the assets, such that the potential tax              
          liability would be of material and significant concern.7                    
               Petitioner contends that Estate of Piper v. Commissioner,              
          supra at 1087, and Estate of Luton v. Commissioner, T.C. Memo.              

               7In Ward v. Commissioner, 87 T.C. 78, 104 (1986), this Court           
          summarized its position as follows:                                         
               there is no evidence that the liquidation of the entire                
               corporation is imminent or even contemplated.  Under                   
               such circumstances, "We need not assume that conversion                
               into cash is the only use available to an owner, for                   
               property which we know would cost him market value to                  
               replace."  Estate of Cruikshank v. Commissioner, 9 T.C.                
               162, 165 (1947).  A hypothetical willing buyer of the                  
               shares in an arm's-length sale could expect no                         
               reduction in price for sales expenses and taxes that he                
               might incur in a subsequent sale of either the shares                  
               or the corporation's underlying assets.  When                          
               liquidation is only speculative, such costs are not to                 
               be taken into account. Estate of Andrews v.                            
               Commissioner, 79 T.C. at 942; Estate of Piper v.                       
               Commissioner, 72 T.C. 1062, 1086-1087 (1979); Estate of                
               Cruikshank v. Commissioner, supra. [Fn. ref. omitted.]                 

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