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length sales, are to be valued by taking into account the
company’s net worth, prospective earning power, dividend-paying
capacity, and other relevant factors.26 See Estate of Andrews v.
Commissioner, 79 T.C. 938, 940 (1982); sec. 20.2031-2(f)(2),
Estate Tax Regs.; Rev. Rul. 59-60, 1959-1 C.B. 237. Similarly,
the valuation of partnership interests requires (1) a fair
appraisal (as of the valuation date) of all assets of the
business, tangible and intangible, including goodwill, (2) an
analysis of the business’ demonstrated earning capacity, and
(3) consideration of other “relevant factors” noted in the stock
valuation rules. See sec. 20.2031-3, Estate Tax Regs.
The value of property as of the decedent’s date of death is
a question of fact requiring the trier of fact to weigh all
relevant evidence of value and to draw appropriate inferences.
See Estate of Newhouse v. Commissioner, supra; Hamm v.
Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo.
1961-347.
B. Development of Legal Standards
The legal standards for allowing buy-sell agreements to
determine estate tax value have developed over time. Some cases
26“Other relevant factors” listed in the regulation include:
(1) Goodwill of the business, (2) economic outlook in the
particular industry, (3) company’s position in the industry and
its management, (4) degree of control represented by block of
stock to be valued, and (5) values of securities of corporations
engaged in the same or similar lines of business that are listed
on a stock exchange. See sec. 20.2031-2(f)(2), Estate Tax Regs.
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