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include transactions under section 368(a) where no gain or loss
is recognizable. Sec. 20.2032-1(c)(1), Estate Tax Regs.
Moreover, we find the regulation consistent with the legislative
history relied on by the District Court in Flanders because the
legislative history describes the general purpose of the statute,
not the specific meaning of “otherwise disposed of” in the
context of tax-free reorganizations. The meaning adopted in
section 20.2032-1(c)(1), Estate Tax Regs., is consistent with
this general purpose, reflecting the Secretary’s determination
that tax-free reorganizations do not constitute dispositions
because of the strict requirements in the corporate
reorganization provisions.
Accordingly, we shall value the post-reorganization stock on
the alternate valuation date, including the transfer restrictions
and the purchase option. See sec. 2032(a); sec. 20.2032-1(c)(1),
Estate Tax Regs.
III. Valuation of Kohler Stock the Estate Owned
The parties have narrowed the valuation questions in this
case to the value of Kohler stock the estate owned. The value of
property is a quintessential question of fact. The parties
advocate values on the alternate valuation date that are
approximately $100 million apart. We begin our analysis of the
experts’ reports after first discussing the law on valuing
property.
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