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For at least each of the 10 years prior to decedent’s death,
Brookshire paid cash dividends to its shareholders.
On November 20, 1993, the date of decedent’s death -- based
on an approximate total book value for Brookshire of $164,764,000
-- the per-share formula price under the buy-sell and stock-
purchase agreements for the shares of Brookshire common stock
owned by decedent’s estate was $73.43 per share.
Prior to decedent's death, no blocks of Brookshire common
stock anywhere near as large as decedent's block of 219,710
shares had been sold. In fact, in the 3 years prior to
decedent’s death, the largest block of Brookshire common stock
that had been sold consisted of 6,111 shares. Prior to
decedent’s date of death, it appears that each sale of Brookshire
stock constituted a non-arm’s-length sale.
On August 22, 1994, decedent’s estate sold 29,410 shares of
Brookshire common stock back to Brookshire for $79.50 per share
in order to provide cash to the estate for payment of decedent’s
reported estate tax liability.
On August 23, 1994, petitioner timely filed decedent's
Federal estate tax return. Based on an appraisal, the total
value of the 219,710 shares of Brookshire common stock owned
directly and indirectly by decedent’s estate was reported on the
estate tax return at $12,907,962 or $58.75 per share.
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