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probate court proceeding was collusive or nonadversarial. Since
the issuance of the section 20.2031-2(h), Estate Tax Regs., in
1958, courts have focused on whether a buy-sell agreement was a
bona fide business arrangement and/or a testamentary device. See
supra p. 70. For instance, in Lauder II, T.C. Memo. 1992-736, 64
T.C.M. (CCH) 1643, 1659, 1992 T.C.M. (RIA) par. 92,736, at 92-
3733, we stated:
the assumption that the formula price reflects a fair
price is not warranted where * * * the shareholders are
all members of the same immediate family and the
circumstances show that testamentary considerations
influenced the decision to enter into the agreement.
In such cases, it cannot be said that the mere
mutuality of covenants and promises is sufficient to
satisfy the taxpayer’s burden of establishing that the
agreement is not a testamentary device. Rather, it is
incumbent on the estate to demonstrate that the
agreement establishes a fair price for the stock. * * *
Here, the True family buy-sell agreements and the transfers
in issue all arose after the issuance of section 20.2031-2(h),
Estate Tax Regs. Respondent essentially has pleaded the
equivalent of bad faith (i.e., that the buy-sell agreements were
substitutes for testamentary dispositions). Thus, different
procedural settings and the intervening regulations prevent us
from being constrained, under the Golsen rule, by the decision of
the Court of Appeals for the Tenth Circuit in Brodrick v. Gore.
b. Petitioners’ Assertion That Respondent
Impermissibly Applied Section 2703
Retroactively
Petitioners argue on brief: “Prior to the enactment of
section 2703, no court had ever required a taxpayer to
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