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restricting the sale or transfer of stock on estate and gift tax
value. See Rev. Rul. 59-60, 1959-1 C.B. at 243.
First, the ruling describes a situation in which stock was
acquired by a decedent subject to an option reserved by the
issuing corporation to repurchase at a certain price. The ruling
states that the option price usually will be accepted as fair
market value for estate tax purposes, under the rubric of Revenue
Ruling 54-76. See id.; Rev. Rul. 54-76, 1954-1 C.B. 194.
However, Revenue Ruling 59-60 further states that the option
price does not control fair market value for gift tax purposes.
See Rev. Rul. 59-60, 1959-1 C.B. at 244.
Second, the ruling provides another formulation of the
Wilson-Lomb test. It states that if the option or buy-sell
agreement (1) resulted from voluntary action by the stockholders
and (2) was binding during life and at death of the stockholders,
then the agreement may or may not, depending on the circumstances
of each case, fix the value for estate tax purposes. See id.
The ruling adds, however, that the agreement would be a factor to
evaluate with other relevant factors in determining fair market
value. See id.
Third, the ruling lists factors that must always be
considered in valuing closely held stock “to determine whether
the agreement represents a bonafide business arrangement or is a
device to pass the decedent’s shares to the natural objects of
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