- 22 -
Memo. 1985-595. The hypothetical willing buyer and willing
seller are presumed to be dedicated to achieving the maximum
economic advantage. Estate of Curry v. United States, supra at
1428; Estate of Newhouse v. Commissioner, supra at 218. This
advantage must be achieved in the context of market and economic
conditions at the valuation date. Estate of Newhouse v.
Commissioner, supra at 218.
For Federal estate tax purposes, the fair market value of
the subject property is generally determined as of the date of
death of the decedent; ordinarily, no consideration is given to
any unforeseeable future event that may have affected the value
of the subject property on some later date. Sec. 20.2031-1(b),
Estate Tax Regs.; see also Estate of Newhouse v. Commissioner,
supra at 218; Estate of Gilford v. Commissioner, 88 T.C. 38, 52
(1987).
Although the parties have stipulated the fair market value
of Johnco's assets, they are not in agreement as to the value of
decedent's Johnco stock. Petitioner contends that insofar as
Johnco has a relatively low basis in highly appreciated assets
(built-in capital gains), a share of stock in Johnco is worth
less than a proportionate share of Johnco's assets, because such
assets cannot be disposed of without the corporate level
recognition of capital gains taxes. Moreover, petitioner
contends that decedent's Johnco stock is less valuable because of
the existence of a minority shareholder and because the shares
lack marketability. Finally, petitioner asserts that the family
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011