- 25 -
To this amount, Mr. Hitchner added $3,046,823 of insurance
proceeds on decedent’s life13 to yield a value of approximately
$10 million for 100 percent of BCC’s shares. Multiplying this
amount by decedent’s 83.2-percent interest in BCC resulted in a
corresponding value of $8,360,000 (rounded) for decedent’s 43,080
BCC shares, as of the valuation date. Like Mr. Fodor, Mr.
Hitchner did not apply any discounts or premiums in valuing
decedent’s block of shares.
OPINION
I. Effectiveness of the Buy-Sell Agreement
Federal estate tax is imposed on the transfer of a U.S.
citizen’s taxable estate. Sec. 2001(a); U.S. Trust Co. v.
Helvering, 307 U.S. 57, 60 (1939). The taxable estate is defined
as the gross estate less prescribed deductions. See sec. 2051.
The gross estate includes all property interests owned by the
decedent at death; the value of the gross estate is generally the
fair market value of the included property as of the valuation
date, which is generally the date of death. See secs. 2031(a),
2033; sec. 20.2031-1(b), Estate Tax Regs.
13 Although described as the life insurance proceeds on
decedent’s life, the figure Mr. Hitchner actually used was that
for the proceeds from the policy on Mr. Jennings’s life. The
insurance proceeds received on decedent’s life were $3,146,134.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011