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Circuit eroded the requirements that a seller of stock be
knowledgeable and that the seller’s shares be comparable in
number to the shares subject to valuation in order for the sale
to be probative of a valuation of the latter shares.1 In fact,
the Court of Appeals noted specifically as to the knowledge
requirement that both sellers had sold their stock at
approximately the same price as listed in the appraisal and that
both sellers were aware that dividends had been meager even in
prosperous years. Id. at 1148. The Court of Appeals also
indicated as to the comparable property requirement that the
prior sales of stock were not unrepresentative of the stock
subject to valuation. Id.
As to the two prior sales of stock in this case, we also are
unpersuaded that either of those sales was made by a
knowledgeable seller who was not compelled to sell or was made at
arm’s length. See Estate of Fitts v. Commissioner, 237 F.2d at
731 (taxpayer bears the burden of establishing that sales are
made at arm’s length and in the normal course of business). In
addition, contrary to the factual setting of Morrissey v.
Commissioner, supra, the two prior sellers in this case did not
sell their stock for the amount set forth in an appraisal. They
1 We use the term “comparable in number” to mean that in
this respect, as in others, the characteristics of the property
offered as a comparable must not diverge so far from those of the
property being valued that they cannot be taken into account by
adjustments.
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