- 17 - of Cyril’s shares, Cyril retained a life estate within the meaning of section 2036(a). Since the 1971 transfers were in fulfillment of the 1951 Agreement, we must look to the value of the consideration that Cyril transferred and received on October 31, 1951. In order to find for the estate, the lifetime interests in Joseph’s shares received by Cyril must be “adequate and full consideration” for the remainder interest Cyril was required to transfer to his children, both interests being valued as of October 31, 1951. Estate of Magnin v. Commissioner, 184 F.3d at 1080; see also Estate of Wheeler v. United States, supra at 767; Estate of D’Ambrosio v. Commissioner, supra at 313. A. Valuation of Stock of JM and Specialty In determining the value of unlisted stocks, actual arm’s- length sales of such stock conducted in the normal course of business within a reasonable time before or after the valuation date are the best indicia of market value. See Duncan Indus., Inc. v. Commissioner, 73 T.C. 266, 276 (1979). However, the stocks of JM and Specialty were not publicly traded at the time of the 1951 Agreement, and there is no evidence of sales of stock of these two companies at any time near October 31, 1951. 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.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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