The Tax Court has held that a buy-sell agreement was irrelevant in the valuing of closely held stock. In the case, the owner / decedent held a controlling interest in the business. His brother-in-law was also a part owner in the company. Together the two had a buy-sell agreement restricting lifetime transfers and at death. The agreement required THE COMPANY to buy the shares upon death. This is known as a stock redemption agreement.The IRS refused to acknowledge the buy-sell agreement as the proper avenue to value the estate of the deceased. The agreement was originally executed long before the decedent’s death and called for book value. After the decedent’s death, the buy-sell was modified causing the sale price to be substantially lower than in the books. This agreement was not allowed for valuation purposes.
Points of Interest
- Nearly every form of energy has increased in price well above the percent of inflation.
- Increased costs have taken their toll on American businesses.
- Being green is cost effective to your bottom line, not only financially, but also from a tax perspective as many tax deductions are available at both the federal and state level.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors