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assets, including proceeds of life insurance policies payable to
or for the benefit of the company, to the extent such
nonoperating assets have not been taken into account in the
determination of net worth, prospective earning power and
dividend-earning capacity”). Whether BCC’s $4 million obligation
to redeem decedent’s shares offsets the life insurance proceeds,
as the estate argues, is another question. In Estate of
Huntsman, we reasoned that, because life insurance proceeds
should be treated like any other nonoperating asset, to the
extent such assets were considered in valuing a company, they
were subject to offset by corporate liabilities. However, we
were not presented in that case with the question of whether a
corporation’s obligation to redeem the very shares that are to be
valued should be treated as a liability, offsetting corporate
assets.34 The estate here urges that we treat BCC’s enforceable
$4 million obligation to redeem the shares whose value is at
issue as a liability offsetting BCC’s assets (i.e., the
$3,146,134 life insurance proceeds plus almost $1 million in
other assets) in arriving at the value of the same shares.
34 The only redemption involved in Estate of Huntsman v.
Commissioner, 66 T.C. 861 (1976), was of a sufficient number of
the decedent shareholder’s shares to pay estate taxes. The
shares whose value was at issue in Estate of Huntsman were not
the subject of a redemption obligation of the corporation.
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