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computation. Since then, the tax book value formula price has
not been altered.
We have found that buy-sell agreements were not testamentary
substitutes if, inter alia, the agreements contained provisions
for periodic review of the formula price. See Estate of
Carpenter v. Commissioner, T.C. Memo. 1992-653 (dealing with buy-
sell agreement among unrelated parties). We have also been
persuaded that agreements without periodic review provisions were
designed to serve testamentary purposes. See Bommer Revocable
Trust v. Commissioner, T.C. Memo. 1997-380, 74 T.C.M. (CCH) 346,
355, 1997 T.C.M. (RIA) par. 97,380, at 97-2424 (“We find it
unrealistic to assume that the decedent, as the majority
shareholder, would have negotiated a fixed price for the
agreements if he had been bargaining with unrelated parties”).
Under the circumstances of the cases at hand, we believe that
unrelated parties dealing at arm’s length would have included a
provision requiring periodic revaluation, or would have at least
considered amending the tax book value formula price, for two
reasons.
First, Mr. Harris opined, at the time of the agreement, that
a tax book value pricing formula would be appropriate for True
Oil only because of its history of expending the value of proven
oil and gas reserves to discover new ones. If this were not the
case, tax book value would not be a reliable indicator of value
because the reserves’ value would be omitted. Thus, we would
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