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conservator's fiduciary obligations to decedent.27 We think
these were "valid life oriented business reasons" akin to those
underlying the option agreement that passed muster in Cobb v.
Commissioner, T.C. Memo. 1985-208 (option agreement allowing
below-market purchase at decedent's death served business purpose
of encouraging effective management of, and reducing risk of
operating, decedent's rental property).
Respondent argues that the 1995 FSA cannot meet the
requirement of section 2703(b)(1) because the agreement's
subject, decedent's FABG stock, was not an actively managed
business interest but merely an investment asset. We rejected
such an argument in Estate of Bischoff v. Commissioner, 69 T.C.
32, 40-41 (1977), and find it equally unpersuasive here. In our
view, an agreement that represents a fiduciary's efforts to hedge
the risk of the ward's holdings may serve a business purpose
within the meaning of section 2703(b)(1). In addition, planning
for future liquidity needs of decedent's estate, which was also
one of the objectives underlying the 1995 FSA, constitutes a
business purpose under section 2703(b)(1). See 136 Cong. Rec.
30,539 (1990).
27 We note in this regard that the district court concluded
that the 1995 FSA was in decedent's best interest.
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