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20.2031-1(b), Estate Tax Regs.; see also First Natl. Bank v.
United States, 763 F.2d 891, 893-894 (7th Cir. 1985); Estate of
Newhouse v. Commissioner, 94 T.C. at 218; Estate of Gilford v.
Commissioner, 88 T.C. at 52.
In this case, petitioner asks us to look at the price
negotiated in a settlement consummated more than 2 years after
the death of decedent as being determinative of the fair market
value of decedent's Johnco stock on the valuation date. While we
normally do not look to future events in determining fair market
value, the amount set by a freely negotiated agreement made
reasonably close to the valuation date may be relevant, but is
not conclusive, as to fair market value. United States v.
Simmons, 346 F.2d 213 (5th Cir. 1965); First Natl. Bank v. United
States, supra; Estate of Spruill v. Commissioner, 88 T.C. 1197
(1987). Although the product of a freely negotiated and arm's-
length agreement, in which both parties were represented by
counsel, we are not persuaded that the $4,025,000 settlement
amount accurately reflected the fair market value of decedent's
Johnco stock on the valuation date. The settlement amount
closely resembles the $4,200,000 amount recommended by Mr. Buck.
We have found serious fault in his assumptions regarding the need
to liquidate Johnco and have accordingly rejected his
determination of fair market value. In arriving at a settlement
amount of $4,025,000, we think it is likely that Andrew and Dinah
also acted upon the erroneous assumption that Johnco was properly
valued by assuming it would be liquidated. Thus, while we
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