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appraisal, the estate reported decedent’s interest in Renier at a
value of $729,742, or $33.02 per share, on the valuation date.
In the notice of deficiency, respondent valued decedent’s
interest in Renier at $1,633,000, or $73.89 per share, on the
valuation date.
ULTIMATE FINDING OF FACT
The fair market value of decedent’s 22,100 shares of Renier
on the valuation date was $952,000, or $43.08 per share.
OPINION
I. Renier’s Fair Market Value
We must decide the fair market value of decedent’s shares of
stock in Renier on the valuation date. Both parties rely on
expert opinions to support their claimed values.
Fair market value is defined as “‘the price at which the
property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or to sell and
both having reasonable knowledge of relevant facts.’” United
States v. Cartwright, 411 U.S. 546, 551 (1973)(quoting sec.
20.2031-1(b), Estate Tax Regs.). The best method to value a
corporation’s stock is to rely on actual arm’s-length sales of
the stock within a reasonable period of the valuation date. See
Estate of Andrews v. Commissioner, 79 T.C. 938, 940 (1982).
Since Renier’s stock was never publicly or privately traded, all
the experts used less direct methods of valuation.
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Last modified: May 25, 2011