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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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