Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 29

                                       - 29 -                                         
          the 1996 Agreement is invalid, in which case it cannot control              
          value because it is not enforceable, see Estate of Carpenter v.             
          Commissioner, T.C. Memo. 1992-653, or the 1996 Agreement is a               
          novation of the 1981 Agreement, in which case the 1996 Agreement            
          stands alone as the operative agreement and is entitled to no               
          weight because it lacks restrictions on lifetime transfers, see             
          sec. 20.2031-2(h), Estate Tax Regs.  The estate contends that the           
          1996 Agreement modifies the 1981 Agreement and that the two                 
          agreements must be read together, with the 1981 Agreement’s                 
          restrictions on lifetime transfers surviving the modification.              
          As all the relevant events occurred in Georgia, and the 1981                
          Agreement specifies that it will be subject to and governed by              
          the laws of the State of Georgia, we analyze these claims under             
          Georgia law.                                                                
               Respondent contends the 1996 Agreement is invalid because              
          decedent, a trustee of the ESOP, breached a fiduciary duty to the           
          ESOP participants in entering into the agreement.  Respondent               
          argues that, were the ESOP to adopt the $92.85 price per share              
          implicit in the 1996 Agreement, a price almost 50 percent lower             
          than the $164.01 per-share value determined by BVS in its January           
          31, 1997, appraisal, one-half of BCC’s value would disappear, to            
          the detriment of the ESOP participants.                                     

Page:  Previous  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  Next

Last modified: May 25, 2011