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transactions are substantially contemporaneous to the valuation
date and support respondent's valuation.
Moreover, a public offering price is a factor which can be
taken into account with due regard to be given to the time span
between the valuation date and the sale to the public, and the
contingencies inherent in a contemplated public offering. See
Messing v. Commissioner, 48 T.C. 502, 509 (1967). The offering
price of the IPO was $16 a share in August 1983. The IPO was
also substantially contemporaneous to the valuation date and
lends some support to respondent’s valuation.3
Petitioner contends that the book value, as of January 1,
1983, of $.31 a share is a better indicator of value than
respondent’s determination of $11.20 a share. We have long
stated that the book value of a stock is not a reliable basis
from which to determine the stock's fair market value. See
Evans v. Commissioner, 29 B.T.A. 710 (1934); Peavey Paper Mills
v. Commissioner, T.C. Memo. 1960-237 ("Book value frequently
bears no relationship to actual cash value or fair market value."
(quoting Ketler v. Commissioner, 196 F.2d 822, 827 (7th Cir.
1952), revg. and remanding 17 T.C. 216 (1951))). Since we
3 We agree with the Court of Appeals for the Second Circuit
that the public offering price cannot, without adjustment, be
used to determine the fair market value of shares subject to
transfer restrictions. See Biaggi v. United States, 909 F.2d
662, 681 (2d Cir. 1990). However, we do think that the public
offering price does provide a comparable that, with adjustments,
can assist in valuing the shares.
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