- 40 -
transaction. To satisfy this requirement, the estate offered the
expert testimony of an attorney with extensive experience in the
purchase and sale of closely held equity interests. In the
expert's opinion, the 1995 FSA was comparable to arrangements
entered into by persons in arm's-length transactions because the
price and structure for the sale of the FABG stock in the 1995
FSA was virtually identical to the terms of the 1994 Agreement,
which had been reached in arm's-length negotiations between the
conservator and FABG. Respondent argues that the expert's
opinion is insufficient for purposes of section 2703(b)(3),
because it relies on an "isolated comparable" in contravention of
the legislative history of, and regulations under, section
2703(b).28
28 Sec. 25.2703-1(b)(4), Gift Tax Regs., provides:
(4) Similar arrangement.--(i) In general. A right
or restriction is treated as comparable to similar
arrangements entered into by persons in an arm's length
transaction if the right or restriction is one that
could have been obtained in a fair bargain among
unrelated parties in the same business dealing with
each other at arm's length. A right or restriction is
considered a fair bargain among unrelated parties in
the same business if it conforms with the general
practice of unrelated parties under negotiated
agreements in the same business. * * *
(ii) Evidence of general business practice.--
Evidence of general business practice is not met by
showing isolated comparables. * * * [Emphasis added.]
The legislative history of sec. 2703(b)(3) states:
(continued...)
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