-21-
sold their stock for much less than the per-share value set forth
in the later appraisal; the estate, in turn, sold its shares
after the appraisal for more than the fair market value set forth
therein. Moreover, the two respective prior sales represented
1 percent and .7 percent of Glenwood Bank’s outstanding stock.
Decedent’s 116 shares, by contrast, represented 11.6 percent of
that outstanding stock and were the only shares of Glenwood Bank
stock not owned by the other shareholder. Mercer testified
credibly that it was reasonably foreseeable as of the applicable
valuation date that the other shareholder, Bancorporation, would
eventually want to buy that 11.6-percent interest at some unknown
time and that this added a special value to the interest. Our
hypothetical seller would have known the same at the time of the
hypothetical sale and as part of that hypothetical sale would
have demanded compensation for this special value so as otherwise
to not equate the selling price for the 10 shares and 7 shares
with the hypothetical selling price of decedent’s 116 shares.2
As to the third sale, which occurred on October 24, 1997,
approximately 14 months after the applicable valuation date, we
disagree with petitioners that only sales of stock that predate a
valuation date may be used to determine fair market value as of
2 In fact, petitioners are the only ones who have suggested
that one or both of the two prior sales is an accurate measure of
the fair market value of decedent’s 116 shares as of the
applicable valuation date.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011