- 127 -
device, we see that certain patterns emerge. The cases in which
the test was satisfied (i.e., no testamentary device found), and
the buy-sell agreement’s price was held to determine fair market
value, involved buy-sell agreements that (1) were between
unrelated parties or related parties who were not the natural
objects of the decedent’s bounty and (2) were either implicitly
or expressly found to be done on an arm’s-length basis.47 Thus,
case law preceding the enactment of section 2703 shows that
courts were more likely to find that a buy-sell agreement’s price
determined estate tax value under section 20.2031-2(h), Estate
Tax Regs., if the agreement was comparable to that which would be
47Cases involving intrafamily buy-sell agreements that were
held not to determine estate tax value include: Dorn v. United
States, 828 F.2d 177 (3d Cir. 1987); St. Louis County Bank v.
United States, 674 F.2d 1207 (8th Cir. 1982); Estate of Reynolds
v. Commissioner, 55 T.C. 172 (1970); Hoffman v. Commissioner, 2
T.C. 1160 (1943); Bommer Revocable Trust v. Commissioner, T.C.
Memo. 1997-380; Lauder II; Slocum v. United States, 256 F. Supp
753 (S.D.N.Y. 1966). But see Estate of Rudolph v. United States,
93-1 USTC par. 60,130, 71 AFTR 2d 93-2169 (S.D. Ind. 1993).
Cases involving buy-sell agreements that (1) were between
unrelated parties or parties that were not the natural objects of
decedent’s bounty, (2) were implicitly or explicitly found to
have been transacted on an arm’s-length basis, and (3) were held
to determine estate tax value include: Estate of Bischoff v.
Commissioner, 69 T.C. 32 (1977) (brother and sister not
considered natural objects of each other’s bounty; implicitly
arm’s length); Estate of Littick v, Commissioner, 31 T.C. 181
(1958)(three of five parties to agreement were brothers;
explicitly arm’s length); Bensel v. Commissioner, 36 B.T.A. 246
(1937), affd. 100 F.2d 639 (3d Cir. 1938) (son was not natural
object of decedent’s bounty due to hostile relationship;
explicitly arm’s length); Estate of Carpenter v. Commissioner,
T.C. Memo. 1992-653 (unrelated parties to agreement; explicitly
arm’s length); Estate of Seltzer v. Commissioner, T.C. Memo.
1985-519 (only two of five parties to agreement were related;
implicitly arm’s length).
Page: Previous 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 NextLast modified: May 25, 2011