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shares that are the subject of the redemption obligation are
being valued. To do so would be to value BCC in its
postredemption configuration; namely, after decedent’s shares had
been redeemed and BCC’s assets had been contracted by the $4
million redemption payment. Valuing decedent’s 43,080 shares by
means of the hypothetical willing buyer/seller construct
necessarily requires that the corporation’s actual obligation to
redeem the shares be ignored; such a stance is inherent in the
fiction that the shares are being sold to a hypothetical third-
party buyer on the valuation date rather than being redeemed by
the corporation. To the hypothetical willing buyer, decedent’s
43,080 BCC shares constituted an 83.2-percent interest in all of
the assets and income-generating potential of BCC on the
valuation date, including any assets that might be used to
satisfy the actual redemption obligation. To treat the
corporation’s obligation to redeem the very shares that are being
valued as a liability that reduces the value of the corporate
entity thus distorts the nature of the ownership interest
represented by those shares.
By contrast, a hypothetical willing buyer of BCC shares
other than decedent’s would treat the redemption obligation, on
the valuation date, as a corporate liability of BCC, but only in
connection with a simultaneous accounting of the impact of the
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