- 27 -
Second, and more importantly, when the actual facts
do not suggest that the shareholders intended to
liquidate the corporation, this Court has refused to
assume that the hypothetical buyer would do so. Estate
of Ford v. Commissioner, T.C. Memo. 1993-580, 66 T.C.M.
(CCH) 1507, 1517 (1993), aff'd, 53 F.3d 924 (8th Cir.
1995); Estate of Bennett v. Commissioner, T.C. Memo.
1993-34, 65 T.C.M. (CCH) 1816, 1825 (1993). Here,
petitioner stipulated that no liquidation was
contemplated at the time of the subject gifts.
* * * * * * *
Petitioner will no doubt argue that the Tax Court
has not unequivocally stated that the potential capital
gains taxes cannot be considered as a legal matter.
Respondent recognizes that valuation is inherently a
factual consideration. Nevertheless, this Court has
consistently held that when liquidation is speculative,
projected capital gains taxes do not reduce value, Ward
v. Commissioner, 87 T.C. 78, 104 (1986); Estate of Luton
v. Commissioner, T.C. Memo. 1994-539; Estate of Ford v.
Commissioner, T.C. Memo. 1993-580; and that unforeseen
future events cannot affect value, Messing v.
Commissioner, 48 T.C. 502, 509 (1967); Mandelbaum v.
Commissioner, T.C. Memo. 1995-255. The only proper
construction of this conclusory language is that
consideration of these speculative future events,
including capital gains taxes, is improper as a legal
matter. [Fn. ref. omitted.]
We reject respondent's position that, as a matter of law, no
discount or adjustment attributable to ADDI&C's built-in capital
gains tax is allowable in the instant case. Indeed, it appears
that even respondent abandons, or at least contradicts, that
position when respondent acknowledges in respondent's answering
brief that
if a sale or liquidation of ADDI&C's assets was in fact
contemplated on the valuation date or if, in fact,
avoidance of a corporate level capital gains tax was not
available, some reduction in value would be appropriate.
* * * [Emphasis added.]
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