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securities that have readily ascertainable values. Accordingly,
the parties have agreed on the value of the subject corporation’s
assets. The controversy that remains involves the discounts or
reductions from that agreed value. In addition to disagreement
about control and marketability discounts, the parties differ as
to the amount of the reduction from the value for the potential
capital gain tax liability that would arise upon sale of the
marketable securities held by the corporation. In particular, we
must decide whether the value of the corporation should be
reduced by the full amount of the built-in capital gain tax
liability (as asserted by the estate) or by a lesser amount in
which the reduction is based on the present value of the built-in
capital gain tax liability discounted to reflect when it is
expected to be incurred (as asserted by respondent).
A. The Burden of Proof
The estate contends that the burden of proof should shift to
respondent under the provisions of section 7491(a)3 on the issue
considered by the Court.4 Section 7491(a)(1) provides:
3 All section references are to the Internal Revenue Code,
and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated.
4 At trial, the estate filed a motion seeking to shift the
burden to respondent. The Court intimated that it was not
disposed to grant the estate’s motion, but allowed the parties to
further address this matter on brief. For the reason explained
on the record and in this opinion, the estate’s motion will be
denied.
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