Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 67

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          receive on decedent’s death and BCC’s $4 million obligation to              
          redeem decedent’s shares, as set forth in the Modified 1981                 
          Agreement.  Mr. Fodor excluded both the insurance proceeds and              
          the redemption obligation when determining BCC’s value on the               
          theory that the insurance proceeds were offset by the redemption            
          obligation.  In contrast, Mr. Hitchner included the insurance               
          proceeds in valuing BCC, adding their value to his $7 million               
          “concluded” value for BCC, while disregarding the redemption                
               Respondent argues that the insurance proceeds must be                  
          included in BCC’s value as a nonoperating asset, relying on                 
          section 20.2031-2(f), Estate Tax Regs., and Estate of Huntsman v.           
          Commissioner, 66 T.C. 861 (1976).  In contrast, the estate argues           
          that, while insurance proceeds might be a nonoperating asset,               
          under Estate of Cartwright v. Commissioner, 183 F.3d 1034 (9th              
          Cir. 1999), affg. in part and remanding in part T.C. Memo. 1996-            
          286, they must be offset by BCC’s obligation to redeem decedent’s           
          shares, and therefore do not affect BCC’s value.                            
               Estate of Huntsman makes clear that insurance proceeds are             
          treated like any other nonoperating asset when determining a                
          closely held corporation’s value.  Estate of Huntsman v.                    
          Commissioner, supra at 874; see also sec. 20.2031-2(f), Estate              
          Tax Regs. (“consideration shall also be given to nonoperating               

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