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children and those shares, coupled with the shares Cyril was
required to leave to his children under the 1951 Agreement,
represented voting control of JM.
Respondent employed a fair market value approach and
determined the value of the interests transferred and received by
Cyril under a hypothetical willing buyer and willing seller
standard. Fair market value for Federal estate and gift tax
purposes 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); Snyder v. Commissioner, 93
T.C. 529, 539 (1989); sec. 20.2031-1(b), Estate Tax Regs; sec.
25.2512-1, Gift Tax Regs. The standard is objective; it uses a
hypothetical willing buyer and willing seller. See Propstra v.
United States, 680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate
of Newhouse v. Commissioner, supra at 218. The willing buyer and
willing seller are presumed to be dedicated to achieving the
maximum economic advantage, and the views of each hypothetical
person must be taken into account. See Estate of Bright v.
United States, 658 F.2d 999, 1005-1006 (5th Cir. 1981); Kolom v.
Commissioner, 644 F.2d 1282, 1288 (9th Cir. 1981), affg. 71 T.C.
235 (1978); Estate of Newhouse v. Commissioner, supra at 218;
Estate of Kaufman v. Commissioner, T.C. Memo. 1999-119. The
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