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Respondent invites the Court to adopt his proffered
mid-market valuation by analogy to the valuation of stocks and
bonds. In this regard, respondent notes, section 20.2031-2(f),
Estate Tax Regs., and section 25.2512-2(f), Gift Tax Regs.,
provide two rules for valuing stocks and bonds traded on
exchanges. The first rule, the mean transaction method, refers
to mean selling prices. That rule provides:
In general, if there is a market for stocks
or bonds, on a stock exchange, in an over-
the-counter market, or otherwise, the mean
between the highest and lowest quoted selling
prices on the valuation date is the fair
market value per share or bond. * * * [Sec.
20.2031-2(b)(1), Gift Tax Regs.]
See also sec. 25.2512-2(b)(1), Estate Tax Regs. The second rule,
the mean quotation method, refers to the mean of the bid and
asked prices. This rule provides:
If the provisions of paragraph (b) of this
section are inapplicable because actual sales
are not available during a reasonable period
beginning before and ending after the
valuation date, the fair market value may be
determined by taking the mean between the
bona fide bid and asked prices on the
valuation date. [Sec. 20.2031-2(c), Gift Tax
Regs.]
See also sec. 25.2512-2(b)(2), Estate Tax Regs. Respondent
asserts that the values ascertained by the mean-transaction or
mean-quotation method are never adjusted for credit risk or
administrative costs.
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