Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 11

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          A.  Valuation of Decedent’s 50 Shares of C&L Bailey Stock                   
               The value of a decedent’s gross estate includes “the value             
          at the time of his death of all property, real or personal”.                
          Sec. 2031(a).  The relevant value is “the price at which the                
          property would change hands between a willing buyer and a willing           
          seller, neither being under any compulsion to buy or to sell and            
          both having reasonable knowledge of relevant facts.”  Sec.                  
          20.2031-1(b), Estate Tax Regs; see United States v. Cartwright,             
          411 U.S. 546, 551 (1973).  See generally Rev. Rul. 59-60, 1959-1            
          C.B. 237.  The fair market value of property reflects its highest           
          and best use on the valuation date.  Mitchell v. United States,             
          267 U.S. 341, 344-345 (1925); Frazee v. Commissioner, 98 T.C.               
          554, 563 (1992); Symington v. Commissioner, 87 T.C. 892, 896                
               The parties disagree about the date-of-death value of                  
          decedent’s 50 shares of C&L Bailey stock.  They also disagree               
          about the value of the 50 shares of QTIP property includable in             
          decedent’s gross estate under section 2044.  It is undisputed               
          that the 50-share blocks are valued independently of each other             
          rather than aggregated.  See Estate of Mellinger v. Commissioner,           
          112 T.C. 26 (1999).  The parties have, as a threshold matter,               
          focused on the value of the 50 shares that decedent owned                   
          outright, agreeing that the value of this 50-share block will               

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