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of BCC shares. Accordingly, we find that the 1996 Agreement did
not completely cover the subject matter of the 1981 Agreement, so
as to extinguish it.
For the foregoing reasons, we conclude that under Georgia
law, the 1996 Agreement did not effect a novation of the 1981
Agreement, but rather a modification thereof.17 Thus, the two
agreements must be read together and constitute the Modified 1981
Agreement.
B. Binding-During-Life Requirement
Before turning to the questions of whether section 2703
applies to the Modified 1981 Agreement and whether the agreement
is disregarded thereunder, we first consider whether the Modified
1981 Agreement satisfies the requirements of pre-section-2703 law
that a buy-sell agreement, to be respected for purposes of
Federal estate tax value, must be binding not just at death, but
also during the decedent’s lifetime. See, e.g., Estate of
Matthews v. Commissioner, 3 T.C. 525 (1944); Hoffman v.
Commissioner, 2 T.C. 1160, 1179 (1943), affd. sub nom. Giannini
17 If the 1996 Agreement were construed to be a novation of
the 1981 Agreement, the 1996 Agreement would not meet the
binding-during-life requirement of sec. 20.2031-2(h), Estate Tax
Regs., because the 1996 Agreement contained no provisions
restricting lifetime transfers of BCC stock. Accordingly, it
would be disregarded in determining the value of decedent’s BCC
stock for Federal estate tax purposes.
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