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arm's-length sales, the value of closely held stock must be
determined indirectly by weighing the corporation's net worth,
prospective earning power, dividend-paying capacity, and other
relevant factors. Sec. 2031(b); Estate of Andrews v.
Commissioner, 79 T.C. 938, 940 (1982). Fair market value is a
factual determination for which the trier of fact must weigh all
relevant evidence and draw appropriate inferences and
conclusions. Commissioner v. Scottish Am. Inv. Co., 323 U.S.
119, 123-125 (1944).
The parties agree that the fair market value of decedent's
interest in ESI and ISC as of the applicable valuation date,
absent a discount for built-in capital gains, is $328,294 and
$365,419, respectively.6 The estate argues that a willing seller
and a willing buyer of the corporate stock would have discounted
the value of ESI's and ISC's stock to reflect the income tax
liability due upon sale of the condemned properties. In support
thereof, the estate contends: At the time of decedent's death,
the real property owned by ESI and ISC was under threat of
condemnation by the Housing Authority; that the real property was
in fact sold to the Housing Authority; and that a portion of the
nonvoting common stock owned by the decedent at her death was
6 These figures reflect respondent's allowance of the 50
percent minority discount and the parties' agreement that the
fair market value of the real property formerly owned by ESI and
ISC, absent any discount, was $775,000 and $550,000,
respectively.
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