- 29 -
The estate argues that it is irrelevant what portion of
decedent's FABG stock was subject to sale under the put/call
options in the 1995 FSA because any portion passing by bequest
was also subject to the price restrictions of the 1995 FSA. That
is because the estate was required under the 1995 FSA to satisfy
the specific and residual bequests to the Rod Amlie Trust "in
kind" with FABG stock valued at the $118 price. (The Rod Amlie
Trust was likewise bound under the 1995 FSA to accept the stock
at this valuation in full satisfaction of the bequests.21) The
satisfaction of such pecuniary bequests with stock at the fixed
$118 price constitutes a sale or exchange for Federal tax
purposes, the estate argues, citing principles set forth in
section 1.661(a)-2(f)(1), Income Tax Regs.; Kenan v.
Commissioner, 114 F.2d 217 (2d Cir. 1940), affg. 40 B.T.A. 824
(1939); and Suisman v. Eaton, 15 F. Supp. 113 (D. Conn. 1935),
affd. per curiam 83 F.2d 1019 (2d Cir. 1936). Since decedent's
personal representative was required under the 1995 FSA to
exchange FABG stock at the $118 price in satisfaction of the
specific and residual bequests to the Rod Amlie Trust, the value
of the FABG stock transferred in this manner was also restricted
by the 1995 FSA, the estate contends.
21 In the absence of the 1995 FSA, decedent's will did not
address how decedent's FABG stock would be valued for purposes of
the Rod Amlie Trust's right to receive FABG stock equal in value
to one-half of decedent's farm land.
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