Estate of Edward H. Eddy - Page 5




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          value of the estate's BFI shares.  Sometime before the extended             
          due date, the brokerage firm informed the executor that it would            
          not complete the valuation on time.  Another firm was engaged,              
          and it completed the valuation on November 29, 1994.  The firm              
          opined that to dispose of the estate's block of shares on the               
          alternate valuation date, October 13, 1993, the estate would have           
          had to accept 75 cents per share less than that day's mean                  
          trading price (the discount for blockage).5  The firm did not               
          offer its opinion of the appropriate discount for blockage or the           
          fair market value of the shares on the date of decedent's death.            
               On January 19, 1996, the executor filed the estate tax                 
          return, which reported the alternate value of all the assets                
          included in the estate.  The estate reported $5,988,440 as the              
          alternate value of the gross estate and showed $6,604,782 as the            
          date-of-death value.  The estate reported $5,721,987 as the                 
          alternate value of the taxable estate, including $5,370,089 as              
          the value of the BFI stock (reflecting the discount for                     
          blockage).                                                                  
               In the notice of deficiency, respondent allowed the 75-cent-           
          per-share discount for the estate's BFI stock.  However,                    
          respondent determined that the estate must report the fair market           
          value of all the assets as of the date of decedent's death,                 



               5The total value of the discount for blockage is $178,014              
          (75 cent-per-share discount times 237,352 shares).                          





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