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Arm's-length sales of stock in the normal course of business
within a reasonable time before or after the relevant valuation
date represent the best criteria of fair market value. Estate of
Andrews v. Commissioner, supra at 940. In the absence, however,
of arm's-length sales, the value of unlisted and closely held
stock often is based on the value of listed stock of corporations
engaged in similar lines of business. Sec. 2031(b); Estate of
Hall v. Commissioner, 92 T.C. 312, 336 (1989).
Additional factors that are relevant in valuing shares of
stock in closely held corporations are the following:
(1) The general economic outlook and the condition and
outlook of the specific industry involved in the
valuation;
(2) The book value of the stock and the financial
condition of the corporation;
(3) The earning and dividend-paying capacity of the
corporation;
(4) Whether or not the corporation has goodwill or
other intangible value;
(5) The corporation’s net worth; and
(6) Non-arm’s-length sales of the stock and the size
of the block of stock to be valued.
See Estate of Newhouse v. Commissioner, supra at 217-218; sec.
20.2031-2(f)(2), Estate Tax Regs.; Rev. Rul. 59-60, 1959-1 C.B.
237, 238-239.
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