Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 43

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          results in an option price that more closely approximates fair              
          market value” is de minimis.  The estate asserts that the book              
          value price under the 1981 Agreement for decedent’s shares at the           
          time of the 1996 modification was $4.2 million.  It further                 
          asserts that the fair market value of decedent’s shares at the              
          time of the modification was $3,736,242, as demonstrated by the             
          1996 BVS appraisal.  The estate claims that the change in price             
          of decedent’s shares from $4.2 to $4 million thus qualifies as de           
          minimis under section 25.2703-1(c)(2)(iv), Gift Tax Regs.,                  
          because it results in a price that more closely reflected the               
          fair market value of decedent’s BCC shares.                                 
               Assuming, arguendo, that the purchase price in the 1981                
          Agreement is an “option price”, this argument fails because the             
          estate’s calculation of BCC’s book value and fair market value at           
          the time of the modification is flawed.  In calculating the book            
          value price for decedent’s BCC shares under the 1981 Agreement,             
          the estate’s argument assumes that BCC had 92,718 shares                    
          outstanding.  At the time decedent modified the 1981 Agreement,             
          however, BCC had redeemed Mr. Jennings’s shares, and there were             
          only 51,772 shares outstanding.  Dividing BCC’s book value as of            
          January 31, 1996 ($9,135,506),24 by the actual number of shares             

               24 While the Jan. 31, 1996, book value would not reflect               
          BCC’s transfer of $1,990,791 in cash and a $1 million note to Mr.           

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