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willing seller, neither being under any compulsion to buy or sell
and both having reasonable knowledge of relevant facts. United
States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-
1(b), Estate Tax Regs.
With regard particularly to unlisted, closely held stock in
corporations such as TPC (with regard to which no bid and asked
prices or other arm’s-length sales information is available), the
statutory language of section 2031 provides that the value of
stock in comparable public corporations shall be taken into
account. Section 2031(b) provides --
In the case of stock and securities of a
corporation the value of which * * * cannot be
determined with reference to bid and asked prices or
with reference to sales prices, the value thereof shall
be determined by taking into consideration, in addition
to all other factors, the value of stock or securities
of corporations engaged in the same or a similar line
of business which are listed on an exchange.
In utilizing, however, public companies to estimate the
value of private, closely held companies, care must be taken to
ensure that the public companies used are sufficiently comparable
to the private companies being valued. In this regard, Rev. Rul.
59-60, 1959-1 C.B. 237, 242, cautions as follows:
Although the only restrictive requirement as to
comparable corporations specified in the statute [sec.
2031(b)] is that their lines of business be the same or
similar, yet it is obvious that consideration must be
given to other relevant factors in order that the most
valid comparison possible will be obtained. * * *
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