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establishing value.28 Mr. Heebink did not consider the formula
in the stockholders agreement in his valuation analysis.
Moreover, petitioners contend that formula does not provide a
reliable indicator of the fair market value of HII stock as of
November 15, 1995.
A stockholders agreement which restricts the sale or
transfer of stock is not determinative for gift tax purposes;
however, it is a factor to be considered, with other relevant
factors, in determining fair market value. Rev. Rul. 59-60, sec.
8, 1959-1 C.B. at 243; see also Ward v. Commissioner, supra at
105; Estate of Lauder v. Commissioner, T.C. Memo. 1994-527. We
agree that the stockholders agreement provides some indication of
value; however, we are convinced the value derived under the
formula provision is much greater than the fair market value of
HII stock.
First, the buy-sell agreement upon which respondent’s expert
relies was not in effect at the time of the gift. That agreement
was terminated as of the date of the redemption of Mr. Kucklick’s
shares on February 26, 1995. No transactions ever occurred under
the stockholders agreement.
28Mr. Engstrom testified that the valuation formula in the
stockholders agreement, just like a prior stock transaction,
would influence “people’s opinion as to what the value of the
stock is.”
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