T.C. Memo. 1999-119
UNITED STATES TAX COURT
ESTATE OF ALICE FRIEDLANDER KAUFMAN, DECEASED,
JAMES J. MORRISSEY, ALAN S. BERCUTT AND DIANE FANTL,
CO-EXECUTORS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17050-97. Filed April 6, 1999.
S is a family-owned corporation, and D's estate
(E) includes 46,020 shares of S's class A stock. E's
shares represent 19.86 percent of S's total outstanding
shares and is the largest block of S stock owned by one
person. E reported on its Federal estate tax return
that the fair market value of these shares was $29.77
each on the applicable valuation date. E primarily
based its value on two sales of S stock that took place
approximately 2 months after the valuation date; two
members of D's extended family sold their interests in
S (4.67 and 3.25 percent, respectively) to a third
member without investigating the reasonableness of the
sale price and without negotiation. R determined that
the fair market value of E's stock was $70.79 per
share.
Held: The fair market value of E's stock on the
applicable valuation date was $56.50 per share. The
sales upon which E relies are not indicative of the
value of E's stock; among other things, the sellers
were not knowledgeable of the value of their stock, and
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