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1. Whether The Basis of Each Work of Art in the Collection
Is the Work’s Undiscounted Fair Market Value as
Determined by the Panel
Petitioners argue that (1) Augustus v. Commissioner, 40
B.T.A. 1201 (1939), has facts that are identical to this case
and, therefore, is controlling and (2) the “appraised value”
contemplated by section 1.1014-3(a), Income Tax Regs., is the
undiscounted fair market value that was determined by the Panel
for each work of art in the collection. For the reasons set
forth below, petitioners’ arguments are unpersuasive.
In Augustus v. Commissioner, supra at 1202, 1203, the Board
of Tax Appeals was presented with a question regarding the basis
of 2,525 shares of F.W. Woolworth Co. stock that the taxpayer
sold in 1935 for $149,203.99. These shares had been acquired by
the taxpayer from the intestate estate of her mother and were
appraised as of the date of her mother’s death, November 9, 1928,
for Federal estate tax purposes. Id. at 1203-1204. After
applying a blockage discount, respondent determined that the
shares of stock had a value equal to $207,050 (i.e., $82 per
share), and the Federal estate tax liability of the estate of the
taxpayer’s mother was determined on that basis. Id. at 1204.
The average selling price of shares of F.W. Woolworth Co. stock
on November 9, 1928, as determined from sales made on the New
York Stock Exchange, was $86.70 per share. Id. at 1208.
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