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which was not defined in section 20.2031-2(h), Estate Tax Regs.,
required interpretation.
In general, courts evaluated the adequacy of consideration
as of the date the buy-sell agreement was executed, rather than
at the date for valuing property to be included in the decedent-
shareholder’s gross estate. See St. Louis County Bank v. United
States, 674 F.2d at 1210; Lauder II; Estate of Bischoff v.
Commissioner, 69 T.C. at 41 n.9; Bensel v. Commissioner, 36
B.T.A. at 253. However, in exceptional circumstances, courts
examined the adequacy of consideration and conduct of parties
after the buy-sell agreement date if intervening events within
the parties’ control caused a wide disparity between the buy-sell
agreement’s formula price and fair market value. See St. Louis
County Bank v. United States, 674 F.2d at 1211; Estate of Rudolph
v. United States, 93-1 USTC par. 60,130, at 88449-88450, 71 AFTR
2d 93-2169, at 93-2176-93-2177 (S.D. Ind. 1993). In St. Louis
County Bank, supra at 1209, the intervening event (conversion
from moving, storage, and delivery business to real estate rental
business) “had a significant, adverse impact” on the stock’s
value as computed under the buy-sell agreement’s formula price
(computed as 10 times average annual net earnings per share for 5
preceding years).32
32The moving business generated substantial yearly income
(high in 1968 of $1,061.15 per share; low in 1970 of $597 per
share), as defined under the stock purchase agreement’s formula.
(continued...)
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