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1946). However, in gift tax cases, the transferring stockholder
or partner (putative donor) is under no immediate obligation to
sell. See Commissioner v. McCann, 146 F.2d 385, 386 (2d Cir.
1944), revg. 2 T.C. 702 (1943); James v. Commissioner, 3 T.C.
1260, 1264 (1944). Instead, he merely agrees to offer his
interest to the other owners on stated terms if and when he
decides to sell or transfer his interest. Thus, the obligation
to sell has not matured in the gift tax cases and therefore
cannot set a ceiling on transfer tax value.
Resale value is not the only factor to consider in
determining fair market value for gift tax purposes. Until the
transferor actually disposes of his interest, he is entitled to
all the rights and privileges of ownership (e.g., rights to
receive dividends and to decide when to dispose of his interest).
See Harwood v. Commissioner, 82 T.C. at 261; Estate of Reynolds
v. Commissioner, 55 T.C. at 190; Baltimore Natl. Bank v. United
States, 136 F. Supp. 642, 654 (D. Md. 1955). Thus, courts found
that gift tax fair market value should include this “retention
value”, which the buy-sell agreement price does not adequately
capture.
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