- 12 -
To determine the value of an unlisted stock, an actual
arm’s-length sale of a similar stock within a reasonable time
before or after a decedent’s date of death is indicative of its
fair market value. Ward v. Commissioner, 87 T.C. 78, 101 (1986).
In the absence of arm’s-length sales, fair market value
represents the price that a hypothetical willing buyer would pay
a hypothetical willing seller, both persons having reasonable
knowledge of all relevant facts and neither person compelled to
buy or sell. Estate of Hall v. Commissioner, 92 T.C. 312, 335
(1989). It is implicit that the buyer and seller would aim to
maximize profit and/or minimize cost in the setting of a
hypothetical sale. Estate of Watts v. Commissioner, 823 F.2d
483, 486 (11th Cir. 1987), affg. T.C. Memo. 1985-595; Estate of
Newhouse v. Commissioner, 94 T.C. 193, 218 (1990). Therefore, we
consider the view of both the hypothetical seller and buyer.
Kolom v. Commissioner, 644 F.2d 1282, 1288 (9th Cir. 1981), affg.
71 T.C. 235 (1978).
On the original estate tax return, the estate reported
$2,246,500 as the discounted value of the Godfrey interest.
After respondent determined that the discounted value of the
Godfrey interest was $4,835,300, the estate, in an amended estate
tax return, reported a reduced discounted value of $1,941,000.6
6 We note that values or discounts reported or claimed on an
estate tax return may be considered admissions and, to some
(continued...)
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011