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Generally, only facts reasonably known on the valuation date
provide a basis for the valuation. Estate of Newhouse v.
Commissioner, supra at 218.
In valuing closely held stock, discounts are often warranted
to reflect the stock's lack of marketability and limitations on
transferability. Estate of Newhouse v. Commissioner, supra at
249; Estate of Andrews v. Commissioner, supra at 953.
The fair market value of closely held stock may be
controlled for estate tax purposes by an enforceable agreement
that fixes the price at which the stock can be sold during a
taxpayer's lifetime and upon the decedent's death. Estate of
Bischoff v. Commissioner, 69 T.C. 32, 39 (1977); Estate of
Reynolds v. Commissioner, 55 T.C. 172, 188-189 (1970); Estate of
Obering v. Commissioner, T.C. Memo. 1984-407; sec. 20.2031-2(h),
Estate Tax Regs.
Under the buy-sell and stock-purchase agreements involved in
this case, if Brookshire failed to exercise its rights under the
buy-sell agreements, neither decedent nor her estate was
prohibited from selling the stock at a price lower or higher than
the formula price. We conclude, and the parties do not dispute,
that for Federal estate valuation purposes, the formula price set
forth in the buy-sell and stock-purchase agreements does not
control the value of the stock.
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