- 9 -
characteristics of these hypothetical persons are not necessarily
the same as the individual characteristics of the actual seller or
the actual buyer. Estate of Curry v. United States, 706 F.2d
1424, 1428, 1431 (7th Cir. 1983); Estate of Bright v. United
States, 658 F.2d 999, 1005-1006 (5th Cir. 1981). The hypothetical
willing buyer and the hypothetical willing seller are presumed to
be dedicated to achieving the maximum economic advantage. Estate
of Curry v. United States, supra at 1428; Estate of Newhouse v.
Commissioner, 94 T.C. 193, 218 (1990).
In the case of unlisted stock, like the ADDI&C stock in
question, the price at which sales of stock are made in arm's-
length transactions in an open market is the best evidence of its
value. Champion v. Commissioner, 303 F.2d 887, 893 (5th Cir.
1962), revg. and remanding T.C. Memo. 1960-51. In the instant
case, the record does not disclose any such sales of ADDI&C stock.
Where the value of unlisted stock cannot be determined from
actual sale prices, its value generally is to be determined by
taking into consideration the company's net worth, prospective
earning power, and dividend-paying capacity, as well as other
relevant factors, including the company's good will, its position
in the industry, its management, the degree of control of the
business represented by the block of stock to be valued, and the
values of securities of corporations engaged in the same or
similar lines of business that are listed on a stock exchange.
Sec. 25.2512-2(f)(2), Gift Tax Regs. Section 4 of Rev. Rul. 59-
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011