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reasonable to apply the willing buyer/willing seller test to the
* * * [retirement accounts] in the hands of the decedent as the
Estate suggests.” Id. The District Court concluded that a
willing buyer would pay the value of the securities as determined
by applicable securities exchange rates, and a willing seller
would accept the same.
On appeal, the Court of Appeals for the Fifth Circuit agreed
with the District Court’s reasoning and further opined that
“‘There is no support in the law or regulations for [the
estate's] approach which is designed to arrive at the value of
the transfer as between the individual decedent and his estate or
beneficiaries.’” Estate of Smith v. United States, 391 F.3d at
627 (quoting Estate of Robinson v. Commissioner, 69 T.C. 222, 225
(1977)). Further, the Court of Appeals determined that the
estate failed to recognize that “the willing buyer-willing seller
test is an objective one * * *[and] [t]hus, the hypothetical
parties are not the Estate and the beneficiaries of the
Retirement Accounts.” Id. at 628. The Court of Appeals again
rejected the estate’s analogy to cases involving closely held
corporate stock. First, the court observed that those cases were
distinguishable because the type of asset involved was completely
different. Second, the court made the crucial point that
deflated the taxpayer’s argument:
while the stock considered in the above cases would
have built-in capital gains even in the hands of a
hypothetical buyer, the Retirement Accounts at issue
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