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C. Application of Gift Tax Rules to Lifetime Transfers by
Dave and Jean True
1. True Family Buy-Sell Agreements Do Not Control Gift
Tax Values
The weight of authority establishes that the True family
buy-sell agreements do not fix values for Federal gift tax
purposes. However, petitioners contend that identical standards
should apply to determine whether buy-sell agreements control
values for both estate and gift tax purposes. We disagree, for
the reasons stated below.
First, petitioners argue that “fair market value” has the
same meaning for estate tax and gift tax purposes; therefore, the
standard for determining whether a buy-sell agreement controls
fair market value should be the same under both regimes.
Although petitioners’ argument has superficial appeal, it does
not reflect the development of the law in this area.
Second, petitioners attempt to distinguish the cases at hand
from the many cases in which restrictive agreements were found
not to determine gift tax value. Petitioners suggest that in
those cases, courts emphasized that the event giving rise to an
obligation to sell had not occurred as of the date of gift (i.e.,
gift transfers of stock or partnership interests did not trigger
option or first-offer provisions). As a result, it was not
certain whether or when the buy-sell provisions would be
triggered. Petitioners contrast this with the treatment of
transfers at death, stating that courts allowed buy-sell
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