Estate of Pauline Welch, Deceased, Newton G. Welch, Jr. and Lois Welch McGowan, Co-Executors - Page 10

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          sold on March 4, 1994, at a per share price equal to the per                
          share price shown on the estate's Federal estate tax return.  As            
          to the March 4, 1994, stock sale, the estate is, in essence,                
          arguing that the sale is indicative of what a willing buyer would           
          have paid for the stock on the valuation date given the income              
          tax liability inherent in the aforementioned property.                      
               Respondent makes several arguments for disallowing a built-            
          in capital gains discount.  First, respondent argues that the               
          estate has not established that a liquidation of the corporations           
          or the sale of the corporations' assets was likely to occur.                
          Among other things, respondent contends that the estate has                 
          failed to show that the condemnation of the subject properties              
          was foreseeable on the valuation date, and that the evidence                
          establishes that legislative action to condemn the property was             
          not taken until August 12, 1993, more than 5 months after the               
          valuation date.  Second, respondent argues that the discount is             
          not warranted where only the real estate, and not the                       
          corporations, was subject to condemnation.  Third, respondent               
          argues that the discount is not warranted where both corporations           
          could avoid, and did indeed avoid, the recognition of gain under            
          section 1033.                                                               
               As previously stated, ordinarily a sale within a reasonable            
          time before or after the valuation date is the best criteria of             







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