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and Jean Barnes each reported on their 1992 gift tax returns that
the fair market value of Rock Hill's stock was $221 per share.
II. OPINION
The issues for decision are the fair market values of Home
and Rock Hill stock that petitioners gave to their children and
grandchildren in 1992.
A. Fair Market Value
Fair market value is the price at which the property would
change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts. United States
v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax
Regs. The fair market value of stock is a question of fact.7
Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg.
T.C. Memo. 1961-347. If selling prices for stock in a closely
held corporation which is not listed on any exchange are not
available, then we decide its fair market value by considering
factors such as the company's net worth, earning power, dividend-
paying capacity, management, goodwill, position in the industry,
7 Petitioners bear the burden of proving that respondent's
determinations in the notices of deficiency are erroneous, Welch
v. Helvering, 290 U.S. 111, 115 (1933), and respondent bears the
burden of proving the increased gift tax deficiencies resulting
from respondent's amended answers. Rule 142(a). However, on
this record, our conclusions are not affected by who bears the
burden of proof.
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