Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 79

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          his view that the life insurance proceeds should be accounted for           
          as a dollar-for-dollar increase in the value otherwise determined           
          for BCC.                                                                    
               The estate contends that this treatment of life insurance              
          proceeds is inconsistent with Estate of Huntsman v. Commissioner,           
          66 T.C. 861 (1976), because it leads to an increase in BCC’s                
          value equal to those proceeds.  We disagree.  In Estate of                  
          Huntsman v. Commissioner, supra at 874, we observed that “it is             
          * * * obvious that the price paid by a willing buyer would not              
          necessarily be increased by the amount of the life insurance                
          proceeds.”  (Emphasis added.)  We rejected the Commissioner’s               
          position in that case that life insurance proceeds, received by             
          the corporation upon the death of the shareholder whose shares              
          were being valued, produced a dollar-for-dollar increase in the             
          corporation’s value because his position “would treat the life              
          insurance proceeds differently than other nonoperating assets.”             
          Id. at 875.  The income-based valuation approach employed in                
          Estate of Huntsman multiplied earnings by a price-earnings ratio            
          without factoring nonoperating assets into the income-based                 
          value.  The life insurance proceeds therefore did not affect the            
          income-based value; they were accounted for only as part of the             
          asset-based value.  Since the asset-based value produced only a             
          proportionate impact on the final blended value, the life                   

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