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proposition that adequacy of the formula price is only one factor
to consider in evaluating whether a buy-sell agreement is bona
fide and not a device. They further contend that, under Estate
of Bischoff v. Commissioner, 69 T.C. 32 (1977), if the formula
price equaled fair market value at the agreement date, it was
strong evidence of a fair or realistic buy-sell agreement price.
Thus, petitioners argue that tax book value was a fair price
because tax book value equaled fair market value at the dates of
agreement for the True Oil and Belle Fourche interests
transferred to the True children (as determined by the 1971 and
1973 gift tax cases).
We disagree with petitioners’ contention. As previously
discussed, see supra pp. 85-90, we are not bound by the District
Court’s determinations in the 1971 and 1973 gift tax cases that
the tax book value of interests in True Oil and Belle Fourche
equaled fair market value at the agreement dates. As a result,
we are free to determine independently the fair market value of
True Oil and Belle Fourche transferred interests at those dates,
without taking into account the depressive effect of the buy-sell
agreements. To do this, we refer to the valuation information
provided in the SRC appraisals.
In the True Oil and Belle Fourche appraisals, which were
prepared for litigation, SRC ostensibly used recognized valuation
methods to derive a “freely traded value” for the transferred
interests as of the agreement dates. The freely traded value for
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