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Discussion
For Federal estate tax purposes, property includable in the
gross estate is generally included at its fair market value on
the date of decedent's death. Secs. 2031(a) and 2032(a); sec.
20.2031-1(b), Estate Tax Regs. Fair market value is defined as
the price that a willing buyer would pay a willing seller, both
persons having reasonable knowledge of all relevant facts and
neither person being under a compulsion to buy or to sell.
Sec. 20.2031-1(b), Estate Tax Regs.; see also United States v.
Cartwright, 411 U.S. 546, 551 (1973); Mandelbaum v. Commissioner,
T.C. Memo. 1995-255, affd. without published opinion 91 F.3d 124
(3d Cir. 1996). The willing buyer and the willing seller are
hypothetical persons, instead of specific individuals and
entities, and the characteristics of these imaginary persons are
not necessarily the same as the personal characteristics of the
actual seller or a particular buyer. Estate of Bright v. United
States, 658 F.2d 999, 1005-1006 (5th Cir. 1981).
In determining the value of unlisted stocks, actual arm's-
length sales of such stock in the normal course of business
within a reasonable time before or after the valuation date are
ordinarily the best criteria of market value. In the absence of
5(...continued)
in the value of ESI's and ISC's real property from the estate's
reported value of $750,000 and $500,000, respectively, to
$775,000 and $550,000, respectively.
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Last modified: May 25, 2011