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Petitioners try to downplay the importance of the subsequent
(third) sale of the estate’s 116 Glenwood Bank shares by
characterizing it as a sale to a strategic buyer who bought the
shares at greater than fair market value in order to become the
sole shareholder of Glenwood Bank. Respondent argues that the
third sale was negotiated at arm’s length and is most relevant to
our decision. We agree with respondent. Although petitioners
observe correctly that an actual purchase of stock by a strategic
buyer may not necessarily represent the price that a hypothetical
buyer would pay for similar shares, the third sale was not a sale
of similar shares; it was a sale of the exact shares that are now
before us for valuation. We believe it to be most relevant that
the exact shares subject to valuation were sold near the
valuation date in an arm’s-length transaction and consider it to
be of much less relevance that some other shares (e.g., the 10
shares and 7 shares discussed herein) were sold beforehand. The
property to be valued in this case is not simply any 11.6-percent
interest in Glenwood Bank; it is the actual 11.6-percent interest
in Glenwood Bank that was owned by decedent when she died. See
Bank One Corp. v. Commissioner, supra at 311-312.4 The two prior
sales of 10 shares and 7 shares, respectively, left decedent’s
11.6-percent interest as the only interest not owned by the other
4 Of course, we value that actual 11.6-percent interest in
the context of a hypothetical willing buyer and a hypothetical
willing seller.
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