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not control value for Federal gift tax purposes.53 At most, a
buy-sell agreement may be a factor to consider in determining
gift tax value. See Ward v. Commissioner, 87 T.C. at 105;
Harwood v. Commissioner, 82 T.C. at 260; Berzon v. Commissioner,
63 T.C. 601, 613 (1975), affd. 534 F.2d 528 (2d Cir. 1976);
Estate of Reynolds v. Commissioner, 55 T.C. at 189; Rev. Rul. 59-
60, 1959-1 C.B. 237. Many reasons have been advanced by this
Court and others for the disparate treatment accorded buy-sell
agreements for gift tax versus estate tax purposes.
In estate tax cases, the purchasing individuals or entities
have immediately exercisable, valid, and irrevocable rights to
purchase the decedent’s interest from the estate as of the
valuation date. The critical event (death) that subjects the
stock to the purchase right has occurred, and it is clear that
the seller-estate can receive no more than the formula price.
See Spitzer v. Commissioner, 153 F.2d 967, 970-971 (8th Cir.
53See Spitzer v. Commissioner, 153 F.2d 967, 971 (8th Cir.
1946); Krauss v. United States, 140 F.2d 510, 511 (5th Cir.
1944); Commissioner v. McCann, 146 F.2d 385, 386 (2d Cir. 1944),
revg. 2 T.C. 702 (1943); Ward v. Commissioner, 87 T.C. 78, 105
(1986); Harwood v. Commissioner, 82 T.C. 239, 260 (1984), affd.
without published opinion 786 F.2d 1174 (9th Cir. 1986); Berzon
v. Commissioner, 63 T.C. 601, 612-613 (1975), affd. 534 F.2d 528
(2d Cir. 1976); Estate of Reynolds v. Commissioner, 55 T.C. 172,
189-190 (1970); James v. Commissioner, 3 T.C. 1260, 1264 (1944),
affd. per curiam 148 F.2d 236 (2d Cir. 1945); Moore v.
Commissioner, 3 T.C. 1205, 1211 (1944); Rev. Rul. 59-60, 1959-1
C.B. 237; Hood et al., Closely Held Corporations in Business and
Estate Planning, Vol. II, sec. 9.13.2, p. 151-152 (1982); Bittker
& Lokken, 5 Federal Taxation of Income, Estates & Gifts, par.
135.3.10 at 135-57 through 135-59 (2d ed. 1993).
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