Estate of Pauline Welch, Deceased, Newton G. Welch, Jr. and Lois Welch McGowan, Co-Executors - Page 11

                                       - 11 -                                         

          market value.  See Estate of Scanlan v. Commissioner, T.C. Memo.            
          1996-331, affd. without published opinion                                   
          116 F.3d 1476 (5th Cir. 1997).  However, in this case, we do not            
          assign any weight to the March 4, 1994, stock sale which included           
          the sale of nonvoting common shares in ESI and ISC.  The sale was           
          between related parties, the coexecutors (decedent's son and                
          daughter).7  Moreover, the coexecutors appear to have determined            
          the sales price of the stock solely by referencing its fair                 
          market value as reported on decedent's Federal estate tax return,           
          even though the sale occurred approximately 12 months after                 
          decedent's death.  We therefore focus our attention on the issue            
          of whether the value of decedent's interest in ESI and ISC                  
          includes a discount for built-in capital gains tax liability.               
          The estate must prove error in respondent's determination of                
          value as set forth in respondent's notice of deficiency.  Rule              
          142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).                       
               This Court has repeatedly rejected reductions in value of              
          closely held stock to reflect built-in capital gains tax                    
          liability where the evidence fails to establish that a                      
          liquidation of the corporation or sale of the corporation's                 
          assets is likely to occur.  See Ward v. Commissioner, 87 T.C. 78,           
          103-104 (1986); Estate of Andrews v. Commissioner, supra at 942;            


               7  We also note that Lanny B. McGowan, Lois Welch McGowan's            
          husband, was and remains an officer of ISC.                                 




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011