Estate of Alice Friedlander Kaufman - Page 1

                                 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                      
                    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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