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of analysis.41 Without a finding that the agreements were
testamentary devices, the District Court was free to consider the
buy-sell restrictions along with other relevant factors in
determining fair market value. See Rev. Rul. 59-60, 1959-1 C.B.
at 244.
In the cases at hand, we also must determine, as part of our
evidentiary findings, fair market value on the agreement dates to
help us decide whether the True companies’ buy-sell agreements
were testamentary devices. However, in so doing, we would not
take into account any depressive effect that the buy-sell
agreements might have had on value; to do otherwise would be to
indulge in circular reasoning that would assume the answer at the
outset of the inquiry. Therefore, the facts we must find in the
cases at hand (fair market value at agreement dates without
considering impact of buy-sell restrictions on value) were not
required to be found by the District Court in the 1971 and 1973
gift tax cases, leaving the matter open to our examination in the
cases at hand.
We analyze the differences between a formula price under a
buy-sell agreement and fair market value on the agreement date to
41The District Court’s approach was similar to that employed
in Estate of Hall v. Commissioner, 92 T.C. 312 (1989), where we
did not decide whether the price determined under an adjusted
book value formula price was dispositive for estate tax purposes.
Instead we held, after reviewing the expert reports, that the
actual date of death fair market value of the shares did not
exceed the formula price. See discussion infra pp. 141-144.
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