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one-third of the shares of stock. At the time of her death,
decedent owned one-third, or 195, of the total 585 shares.
The farm was situated on approximately 1,300 acres, half of
which were bottomland subject to flooding and half of which were
forest and pasture. JFI was actively engaged in farming, with
earnings for the years from 1988 through 1992 varying from a low
of $9,243 in 1990 to a high of $28,145 in 1992. JFI paid
dividends only in amounts sufficient to meet its shareholders’
tax liabilities with respect to JFI’s operations. JFI’s farming
operations were managed and conducted by an unrelated individual
serving as farm manager pursuant to a contract of indefinite
duration. The manager was compensated with a salary and various
benefits, plus a 5-percent share of farm profits. On the date of
decedent’s death, the undiscounted value of JFI was $1,818 per
share.
On the estate tax return, petitioner claimed a value for
decedent’s shares in JFI of $331.94 per share. In the notice of
deficiency, respondent valued decedent’s shares in JFI at
$1,636.32 per share. Respondent now concedes that the value of
decedent’s shares in JFI is no greater than $1,029 per share.
ULTIMATE FINDING OF FACT
The fair market value of decedent’s 195 shares in JFI at the
date of decedent’s death was $439 per share, or a total of
$85,605.
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Last modified: May 25, 2011