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The estate’s valuation of Clubside was based on assumptions
unsupported by the record and was inconsistent in utilizing the
value of the Cathead property. Conversely, Mr. Mitchell’s
analysis of the value of Clubside was thorough and supported by
the evidence in the record. After reviewing all the evidence in
the record, we agree with Mr. Mitchell’s analysis and hold that
the value of decedent’s 27.5-interest in Clubside was $338,000 as
of the valuation date.
3. Value of Stock in WLI
Respondent determined that the value of decedent’s 770
shares of stock in WLI was $534,000, without regard to the
guaranty provision. The estate determined that the value of
decedent’s 770 shares of stock in WLI was $316,740, without
regard to the guaranty provision. Respondent raised the issue of
the correct value of decedent’s stock interest in WLI after the
issuance of the notice of deficiency and agrees that he bears the
burden of proof with respect to this issue. See Rule 142(a);
Shea v. Commissioner, 112 T.C. 183, 191 (1999).
In the absence of arm’s-length sales, the value of closely
held stock is determined indirectly by weighing the corporation’s
net worth, prospective earning power, dividend-paying capacity,
and other relevant factors. See Estate of Andrews v.
Commissioner, 79 T.C. 938, 940 (1982); sec. 20.2031-2(f), Estate
Tax Regs. Additionally, the rights, restrictions, and
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