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believe the settlement was arm's length, we doubt its reliability
as an accurate measure of the fair market value of decedent's
Johnco stock on the valuation date. Thus, we accord little
weight to the settlement amount in determining the fair market
value of decedent's Johnco stock.
C. Valuation Conclusions
On the basis of the foregoing, we find that for purposes of
computing the taxable estate of decedent, the fair market value
of decedent's 81,641 shares of Johnco stock was $5,784,477
(approximately $71 per share) on the date of decedent's death,
calculated as follows:
Fair market value
of stock interest
100% 98%
Johnco $6,958,000 $6,818,840
Reduction for built-in
capital gains (872,920) (855,462)
Difference 6,085,080 5,963,378
Less marketability discount (182,552) (178,901)
Fair market value 5,902,528 5,784,477
Fair market value per share: $71
III. Constitutional Challenge
We now address petitioner's contention that a portion of the
estate tax as applied is unconstitutional. The Federal estate
tax is imposed on the transfer of the taxable estate of every
decedent who is a citizen or resident of the United States. Sec.
2001; United States Trust Co. v. Helvering, 307 U.S. 57, 60
(1939). The taxable estate is defined as the decedent's gross
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