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market value of decedent’s stock on the date of his
death. In our prior opinion, we resolved that the
formula price was intended to serve a testamentary
purpose, and thus would not be respected for Federal
estate tax purposes. It is worth noting at this point
that we have not had the opportunity to address the
validity of each and every aspect of the shareholder
agreement. Nonetheless, we repeat the observation made
earlier in these proceedings that there is no evidence
in the record that the Lauders engaged in arm’s-length
negotiations with respect to any aspect of the
shareholder agreement. Absent proof on that point, we
presume that all aspects of the agreement, particularly
those tending to depress the value of the stock, are
tainted with the same testamentary objectives rendering
the formula price invalid. [Fn. ref. omitted.]
In light of our holding in * * * [Lauder II] we
hold that the specific provisions of the shareholder
agreement are not relevant to the question of the fair
market value of decedent’s stock on the valuation date.
Simply put, the willing buyer/willing seller analysis
that we undertake in this case would be distorted if
elements of such testamentary origin are injected into
the determination.
Although we did not hold the buy-sell agreement in Lauder
III invalid per se, the only evidentiary weight we accorded it
was to recognize that it demonstrated the Lauders’ commitment to
maintaining family control over the business. That fact, among
others, justified the use of a lack of a marketability discount
in the valuation analysis. See Estate of Godley v. Commissioner,
T.C. Memo. 2000-242 (disregarding option provision in valuing
partnership interests because it served as substitute for
testamentary disposition).
In the cases at hand, we hold for similar reasons that the
restrictive provisions of the buy-sell agreements (including but
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