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million, or, in other words, almost twice the amount of the
price actually received. Given the additional facts that the
third sale occurred sufficiently close to the applicable
valuation date and that the record does not reveal any material
change in circumstances that occurred between that date and the
date of the third sale that would have affected the fair market
value of the subject shares, we conclude on the basis of the
limited evidentiary record before us that the third sale is the
best indicium of the fair market value of decedent’s shares at
the time of her death.5 See Estate of Fitts v. Commissioner,
237 F.3d at 731; Rubber Research, Inc. v. Commissioner, 422 F.2d
at 1406; Ward v. Commissioner, 87 T.C. 78, 101 (1986); Estate of
Andrews v. Commissioner, 79 T.C. at 940; see also Silverman v.
Commissioner, 538 F.2d 927, 931 n.7 (2d Cir. 1976) (“Arm’s length
sales of the stock to be valued are, of course, the best evidence
5 We find nothing in the record to support the conclusion
which we draw from the Mercer report that the fair market value
of the subject shares almost doubled from the applicable
valuation date to the time of the third sale and, in light of the
third sale, are unpersuaded by that report’s conclusion as to the
applicable fair market value of those shares. Mercer opined that
the third sale was an arm’s-length sale that involved a seller
who at the time of the third sale lacked knowledge that the value
of its stock exceeded the $1.1 million sale price. The fact that
a more knowledgeable seller might have extracted a higher sale
price for the subject shares does not on the record before us
detract from the probative value of the third sale. At the
least, the price in that sale serves as a floor to the fair
market value of the subject shares and, given that respondent
does not request a higher value, serves in our opinion as the
best measure of the fair market value of the subject shares as of
the applicable valuation date.
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