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determine whether consideration was full and adequate, to resolve
whether the formula price was binding for estate tax purposes.
See id. After considering all the circumstances, and
particularly the arbitrary manner in which the formula price was
selected, we concluded that the agreements were adopted for the
principal purpose of achieving testamentary objectives and were
not binding for estate tax purposes. See id.
Similarly, in the cases at hand we have weighed all material
facts and conclude that the True companies’ buy-sell agreements
were substitutes for testamentary dispositions. Therefore, the
fourth prong (nontestamentary disposition prong) of the Lauder II
test has not been satisfied.
E. Conclusion: True Family Buy-Sell Agreements Do Not
Determine Estate Tax Values
The True family buy-sell agreements do not satisfy the
Lauder II test, because they are substitutes for testamentary
dispositions. As a result, under section 2031 and the related
regulations, the tax book value buy-sell agreement price does not
control estate tax values of interests in the True companies at
issue in the estate tax case.
Petitioners cite Estate of Hall v. Commissioner, 92 T.C. 312
(1989), in support of their position that the buy-sell agreement
price should control estate tax value. In Estate of Hall, the
estate of Joyce C. Hall, the founder of Hallmark Cards, Inc.,
reported the value of his Hallmark shares for estate tax purposes
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