110 T.C. No. 35
UNITED STATES TAX COURT
ESTATE OF ARTEMUS D. DAVIS, DECEASED, ROBERT D. DAVIS,
PERSONAL REPRESENTATIVE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9337-96. Filed June 30, 1998.
Held: In determining the fair market value on a
valuation date after the repeal of the doctrine
established in General Utils. & Operating Co. v.
Helvering, 296 U.S. 200 (1935), of each of two minority
blocks of common stock of company A, the Court is not
precluded on the record presented from giving
consideration to A’s built-in capital gains tax as of
that date of about $26.7 million. Held, further, the
fair market value on the valuation date of each block
of stock at issue is $10,338,725, determined by first
ascertaining A’s net asset value on that date without
regard to any discount or adjustment attributable to
blockage and/or 17 C.F.R. sec. 230.144 (1992) or A’s
built-in capital gains tax, reducing that value by a
15-percent minority discount to which the parties
agree, and reducing the resulting value by a lack-of-
marketability discount of $28 million which the Court
arrived at by giving consideration to, inter alia, A’s
built-in capital gains tax and including as part of
that discount $9 million attributable to such tax.
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