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Estate of Cruikshank v. Commissioner, 9 T.C. 162, 165 (1947);
Estate of Thalheimer v. Commissioner, T.C. Memo. 1974-203, affd.
on this issue and remanded without published opinion 532 F.2d 751
(4th Cir. 1976). Recently, in Eisenberg v. Commissioner, T.C.
Memo. 1997-483, the Court stated:
taxpayers may not obtain a valuation discount for
estate and gift tax purposes based on an event that may
not transpire. Hence, "When liquidation is only
speculative, the valuation of assets should not take
these costs into account because it is unlikely they
will ever be incurred." [Estate of Andrews v.
Commissioner, supra at 942; emphasis added.]
In sum, the primary reason for disallowing a
discount for capital gain taxes in this situation is
that the tax liability itself is deemed to be
speculative. [In prior cases] * * * there was a
failure to show the requisite likelihood that the
beneficiaries would liquidate the corporation or sell
the underlying assets and incur the tax and other
expenses. Further, there was no showing that a
hypothetical willing buyer would desire to purchase the
stock with the view toward liquidating the corporation
or selling the assets, such that the potential tax
liability would be of material and significant concern.
We find that in this case the potential for capital gains
tax recognition was too speculative to warrant application of the
capital gains discount. As suggested in Eisenberg v.
Commissioner, supra, and other cases cited above, the estate must
show the requisite likelihood that the corporation would sell the
assets and incur the tax. Assuming that the condemnation of the
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