Buy-Sell Agreements, Redemption Agreements and Valuing a Family Owned Company for Estate Tax Purposes

When does a stock agreement (buy-sell agreement) meet the requirements of a tax code exception to the general requirement that a company be valued at its fair market value for estate tax purposes? In the same year, Blount was diagnosed with cancer. Because of concerns over BC's ability to conti...

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Bibliographic Details
Published inJournal of Taxation Vol. 137; no. 3; pp. 23 - 30
Main Author Woodlock, Peter
Format Trade Publication Article
LanguageEnglish
Published New York Thomson Reuters (Tax & Accounting) Inc 01.09.2022
Subjects
Agreements
Book value
Construction
Estate taxes
Fair market value
Insurance policies
Life insurance
Reconciliation
Repurchase agreements
Securities buybacks
State court decisions
Stockholders
Tax courts
Tax returns
Valuation
United States > US
Georgia
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Summary:When does a stock agreement (buy-sell agreement) meet the requirements of a tax code exception to the general requirement that a company be valued at its fair market value for estate tax purposes? In the same year, Blount was diagnosed with cancer. Because of concerns over BC's ability to continue following his death after the required buyout of his shares, Blount commissioned several studies to determine how much money his estate would receive upon his death and the amount of money BC would have after the buyout of his shares. [...]of the Tax Court's determination, Mr. Blount's estate was assessed additional estate taxes of approximately $1.4 million. In making its decision, the Eleventh Circuit Court of Appeals ignored BC's 1996 amended stock purchase agreement which set the price of Mr. Blount's 83.2% ownership interest at $4 million and instead valued BC at its fair market value exclusive of insurance proceeds.
ISSN:0022-4863