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authorized by the agreement at issue, if it results in a non-de
minimis change in the value, quality, or timing of the right at
issue, it will be deemed a substantial modification. Sec.
25.2703-1(c)(1), Gift Tax Regs. Assuming, arguendo, that a price
change made on a date other than August 1, and without the
consent of all shareholders, was in compliance with the 1981
Agreement, decedent’s change in the price is a substantial
modification under the regulations if it produced more than a de
minimis change in value. Before the modification, decedent had
the right to have his shares redeemed on the basis of BCC’s book
value from the most recent fiscal yearend, which in November 1996
would have yielded a purchase price for his shares of $7.6
million (based on the January 31, 1996, fiscal yearend book value
of $9,135,506). After the modification, he had the right to have
his shares redeemed at $4 million. Conversely, BCC’s redemption
obligation changed from $7.6 to $4 million. We conclude that
this is a non-de minimis change in the value of decedent’s and
BCC’s rights with respect to decedent’s BCC shares.
The estate further argues that the quality of the right was
not changed by virtue of decedent’s designation of a $4 million
purchase price because it falls under an exception listed in
section 25.2703-1(c)(2), Gift Tax Regs. Section 25.2703-
1(c)(2)(iv), Gift Tax Regs., provides that “A modification that
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