Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 30

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               Transactions in BCC stock between the ESOP and other                   
          parties, including shareholders and plan participants, must be              
          effected at values established by an independent appraiser.  See            
          sec. 401(a)(28)(C).  Respondent does not explain the basis on               
          which the ESOP trustees could adopt the per-share value contained           
          in the 1996 Agreement.  Nor are we aware of one.16                          
               More fundamentally, decedent’s agreement to have his BCC               
          shares redeemed at a price that respondent himself urges was                
          below fair market value actually inured to the benefit of the               
          ESOP participants.  Before the redemption, the ESOP’s 8,692                 
          shares represented approximately 17 percent of the outstanding              
          equity interests in BCC.  After the redemption, the ESOP’s shares           
          represented 100-percent ownership of BCC.  The redemption of                
          decedent’s shares at a bargain price left relatively more                   
          corporate assets for the ESOP owners than would have been the               
          case at a higher redemption price, thus increasing rather than              
          decreasing the value of the BCC shares held by the ESOP and its             
          participants.  Accordingly, respondent’s contention that                    

               16 While a subsequent appraisal of BCC’s outstanding shares            
          might consider the price at which decedent’s BCC shares had been            
          redeemed, such a non-arm’s-length sale between a corporation and            
          its controlling shareholder would presumably be disregarded as an           
          indicator of fair market value.  Indeed, BVS did not consider               
          either the obligation to redeem decedent’s BCC shares or the                
          actual redemption of those shares for $4 million in its 1997 or             
          1998 appraisal.                                                             

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