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We decline to do so for two reasons. First, we have
concluded that the agreement under which BCC was obligated to
redeem decedent’s shares for $4 million must be disregarded under
both section 20.2031-2(h), Estate Tax Regs., and section 2703.
In such circumstances, the terms of the disregarded agreement are
generally not taken into account in determining the fair market
value of the shares subject to the agreement. Estate of True v.
Commissioner, T.C. Memo. 2001-167; Estate of Lauder v.
Commissioner, T.C. Memo. 1994-527; see also Estate of Godley v.
Commissioner, T.C. Memo. 2000-242, affd. 286 F.3d 210 (4th Cir.
2002). As we noted in Estate of Lauder, under these
circumstances, the willing buyer/seller analysis would be
distorted if we disregarded the buy-sell agreement for purposes
of fixing the value of the subject stock, yet allowed provisions
in the agreement to be taken into account when determining the
stock’s fair market value. Thus, it would be improper here to
consider the redemption obligation in the disregarded buy-sell
agreement when determining the fair market value of the stock
covered by that agreement.
Second, even if the impact of the redemption obligation on
BCC’s value were not disregarded under the principles of Estate
of Lauder and like cases, the redemption obligation should not be
treated as a value-depressing corporate liability when the very
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