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under any circumstances, the possibility of any form of built-in
capital gains tax discount. After the parties had agreed to
settlement, petitioners discovered that respondent had, in
another case, Estate of Davis v. Commissioner, 110 T.C. 530
(1998), taken the following reply brief position:
Respondent agrees that if a sale or liquidation of [the
taxpayer’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.
Respondent contends that his trial memorandum comports with the
position stated in the above-cited case and that respondent’s
counsel did not agree that the circumstances for such a discount
or reduction exist here. Respondent references the following
from his trial memorandum in this case:
Because a purchaser of the decedent’s stock could
have avoided or indefinitely deferred payment of
capital gains tax, and because no liquidation or sale
of assets was planned for this particular corporation
as of the date of death, a discount for potential
capital gains tax is too speculative for estate tax
valuation purposes.
Discussion
In this setting, petitioners argue that there was either a
mutual mistake or an affirmative misrepresentation regarding
respondent’s position on the major issue in this case.
Respondent counters that there was a settlement agreement, which
was not founded on a mutual mistake, and that respondent’s
counsel did not misrepresent respondent’s position.
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