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(2), were similar to those contained in section 20.2031-2(h),
Estate Tax Regs. See S. 3209, supra at 30540-30541. S. 3209
also emphasized that the business arrangement and device
requirements were independent tests. See id. Further, S. 3209
explained that OBRA added a third requirement, that the terms of
the option, agreement, right, or restriction must be comparable
to similar arrangements entered into by persons in an arm’s-
length transaction. See id. According to S. 3209, this
requirement was not found in prior law. See id.
II. Do 1971 and 1973 Gift Tax Cases Have Preclusive Effect?
A. Petitioners’ Collateral Estoppel Argument
Petitioners argue that under the doctrine of collateral
estoppel, or issue preclusion, we are bound by certain
determinations of the U.S. District Court for the District of
Wyoming in the 1971 and 1973 gift tax cases. In petitioners’
view, the District Court found, as to True Oil and Belle Fourche,
that (1) their buy-sell agreements were bona fide business
arrangements and (2) book value of the transferred interests
equaled fair market value as of the agreement dates.37
37Petitioners explain that the District Court explicitly
determined that book value equaled fair market value for the two
companies, describing this as an “ultimate” fact in the 1971 and
1973 gift tax cases and an “evidentiary” fact in the cases at
hand. In contrast, petitioners contend that the District Court
implicitly held that the buy-sell agreements were bona fide
business arrangements, because the District Court took the
agreements into account in determining fair market value of the
True Oil and Belle Fourche transferred interests. Petitioners
(continued...)
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