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agreement, we focus attention on the facts surrounding the
creation and implementation of those agreements.
Petitioners assert that the True family buy-sell agreements
satisfy all four prongs of the Lauder II test, while respondent
contends that they flunk two of the four prongs.
A. Was the Offering Price Fixed and Determinable Under the
Agreements?
The parties agree that the formula price set forth in the
True family buy-sell agreements (tax basis book value) was both
fixed and determinable.42 Thus, the first prong of the Lauder II
test is satisfied.
B. Were Agreements Binding During Life and at Death?
Petitioners divide this test into two components: the
agreements must be enforceable under State law and must bind the
transferors both during life and at death. The True family buy-
sell agreements must satisfy both of these components to fulfill
the second prong of the Lauder II test. See Lomb v. Sugden, 82
F.2d 166, 167 (2d Cir. 1936); Wilson v. Bowers, 57 F.2d 682, 683
(2d Cir. 1932); Estate of Salt v. Commissioner, 17 T.C. 92, 99-
100 (1951); Lauder II.
First, respondent argues that the True companies’ buy-sell
agreements were not enforceable under Wyoming law. We disagree.
42However, respondent challenges the propriety of using tax
basis book value as a measure of fair market value.
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