- 14 -
$28.5 million. Thus, respondent must prove by a preponderance of
the evidence that the value of the shares at the moment of
decedent’s death was greater than $28.5 million.
With the discussion that follows, we attempt to provide the
Court of Appeals with a reasoned account of how we reach our
valuation conclusion in this case, mindful that the burden of
persuasion is on respondent.
Discussion
Fair market value for Federal estate and gift tax purposes is
defined as “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.” United States v. Cartwright, 411
U.S. 546, 551 (1973); Snyder v. Commissioner, 93 T.C. 529, 539
(1989); sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift
Tax Regs. The standard is objective; it uses a hypothetical
willing buyer and willing seller. See Propstra v. United States,
680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate of Newhouse v.
Commissioner, 94 T.C. 193, 218 (1990). However, “the hypothetical
sale should not be constructed in a vacuum isolated from the actual
facts that affect the value of the stock”. Estate of Andrews v.
Commissioner, 79 T.C. 938, 956 (1982).
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011