Estate of Ann H. Brookshire, Deceased, Harvey B. King, Independent Executor - Page 10

                                       - 10 -                                         

               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.                                             







Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011