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After concessions,2 the sole issue for decision is the fair
market value of: (1) Decedent's interest in Deft, Inc. (Deft),
and (2) real property located at 12 Rue Verte, Newport Beach,
California (the Newport property) and at 45-550 Navajo Road,
Indian Wells, California (the Indian Wells property).
FINDINGS OF FACT
William J. Desmond, decedent, died on June 17, 1992. At the
time of his death, decedent resided in Orange County, California.
On or about September 22, 1993, an estate tax return on his
behalf was filed. For purposes of valuing his gross estate,
petitioner3 elected to use the alternate valuation date, December
17, 1992. At the time the petition was filed, petitioner resided
in Newport Beach, California.
At the time of his death, decedent, as trustee, held 136,000
shares of Deft stock. This represented 81.93 percent of Deft's
total outstanding shares.
The Deft stock is closely held, unlisted stock. All stock
in Deft was subject to a restrictive share agreement which
provided that a shareholder could transfer his or her stock to a
nonshareholder only after the shareholder offered the shares to
the remaining shareholders.
2 The parties stipulated that petitioner is not liable for
the negligence penalty under sec. 6662. Additionally, on brief,
respondent conceded that petitioner is entitled to deductions
related to administrative expenses and for interest paid.
3 References to "petitioner" are to the executor of
decedent's estate.
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