                       T.C. Memo. 1997-380



                     UNITED STATES TAX COURT



   CAMERON W. BOMMER REVOCABLE TRUST, RONALD BOMMER, TRUSTEE,
    Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent


     ESTATE OF CAMERON W. BOMMER, DECEASED, MARCELLA BOMMER,
  EXECUTRIX, RONALD J. BOMMER, RESIDUARY TRUSTEE, TRUSTEE, AND
    EXECUTOR, CAMERON M. BOMMER, EXECUTOR, RONALD BOMMER, II,
          EXECUTOR, KELLY LONG, EXECUTRIX, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent


    Docket Nos.   15484-94, 15485-94.        Filed August 20, 1997.


    Marc W. Rubin, Burgess L. Doan, Janet L. Houston, and

Michael R. Schmidt, for petitioners.

     Robin L. Herrell and Matthew J. Fritz, for respondent.
                                - 2 -


               MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:    In docket No. 15484-94, respondent determined

a deficiency in petitioner Cameron W. Bommer Revocable Trust's

generation-skipping transfer tax in the amount of $1,117,233.    In

docket No. 15485-94, respondent determined a deficiency in

petitioner Estate of Cameron W. Bommer's Federal estate tax in

the amount of $4,393,397 and generation-skipping transfer tax in

the amount of $1,117,233.

     The issue before us is the effect, if any, of a restrictive

stock agreement on the value of certain stock in CamVic Corp.

that is includable in the Estate of Cameron W. Bommer (decedent).

We severed this issue for trial and opinion.   The remaining

issues, if not settled, will be decided in subsequent

proceedings.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code as in effect for the date of decedent's

death, and all Rule references are to the Tax Court Rules of

Practice and Procedure.


                          FINDINGS OF FACT


     Some of the facts have been stipulated and are so found.

The stipulation of facts is incorporated herein by this

reference.
                                - 3 -

     Decedent was born January 9, 1913, and died testate on

September 10, 1990.   Decedent was survived by his wife, Marcella

Bommer (Marcella), his only child, Ronald J. Bommer (Ronald), and

Ronald's three children:   Cameron M. Bommer (Cameron M.), Kelly

Long, and Ronald Bommer II (Ronald II).1    Decedent and Marcella

were married in the early 1930's, and they remained married until

decedent's death.

     On September 19, 1990, Marcella was appointed the executrix

of decedent's estate.2   On June 4, 1991, Marcella filed a United

States Estate (and Generation-Skipping Transfer) Tax Return (Form

706) on behalf of the estate.   On August 23, 1991, decedent's

estate was closed, final distributions were made from the estate,

and Marcella was discharged as executrix.


1. CamVic Corp.


     CamVic Corp. (CamVic) is a closely held company that was

incorporated in the State of Ohio on October 17, 1958.    Decedent

and Victor Fay started CamVic with total capital contributions of




     1
      At the time the petitions were filed in these cases,
Marcella, Ronald, and Cameron M. Bommer and Kelly Long all
resided in Cincinnati, Ohio, while Ronald II resided in South
Orange, New Jersey.
     2
      The business office for decedent's estate was in
Cincinnati, Ohio, at all times during the pendency of the estate.
The business address of the Cameron W. Bommer Revocable Trust is
also in Cincinnati, Ohio.
                                 - 4 -

$500.3   Of the five voting shares of CamVic issued at its

inception, two shares were held by decedent, one share was held

by Marcella, and two shares were held by Victor Fay.

     At the time of decedent's death, CamVic owned and managed

real property in Ohio, Indiana, and Florida.       See infra p. 16.

Ronald, who began working at CamVic in 1959, drew the plans for

and supervised the construction of several of CamVic's

properties.   Ronald was also responsible for the management and

maintenance of the properties.

     As of May 11, 1965, the ownership of CamVic was as follows:


                  Individual             Shares Owned

                  Decedent                  131
                  Marcella                    1
                  Victor Fay                 88


On this date, Victor Fay sold his entire interest in CamVic to

the corporation for $21,654.16 and was replaced by Ronald on the

board of directors.

     On June 21, 1971, CamVic was merged with two other

corporations owned by the Bommer family--Bommer Road Golf Course,

Inc.4 (BRGC), and Bommer Builders, Inc.5       CamVic was the

     3
      Decedent was initially employed in the building trades; for
several years prior to 1954, decedent and Victor Fay operated a
partnership known as Bommer Builders.
     4
      BRGC was incorporated on Oct. 13, 1969. The record
contains no evidence with respect to the amount of any capital
contributions to BRGC. BRGC began operations in 1970 with a
                                                   (continued...)
                               - 5 -

surviving corporation in the merger.   The value of CamVic stock

used to compute the exchange ratio for the merger was $14,192.45

per share.

     On January 5, 1973, decedent created the Cameron W. Bommer

Trust (CWB Trust),6 to which he transferred his entire interest

in CamVic.   Although revocable during decedent's lifetime, the

trust was to become irrevocable upon his death.   Decedent

reserved the right to vote his CamVic stock as well as to

preclude its sale or transfer during his lifetime.   Kenneth

Hughes was the sole trustee of the CWB Trust from its inception

through April 27, 1981, when he was replaced by Ronald.   Ronald

remained sole trustee through the date of decedent's death.7




     4
      (...continued)
driving range. A par three, nine-hole golf course, a pro shop,
and a snack bar were added later. CamVic continued to operate
the facilities until the end of 1977.
     5
      Bommer Builders, Inc., was incorporated on Dec. 22, 1953.
Decedent and Victor Fay owned 105 and 70 shares, respectively.
These shares were issued in consideration for the transfer of all
assets and the assumption of all liabilities of Bommer Builders
partnership. The sale documents listed the net value of the
assets of Bommer Builders partnership at the time of the transfer
at $17,500.
     6
      The trust was amended or revised on Apr. 27, 1981, Aug. 27,
1982, July 22, 1986, Jan. 27, 1987, Feb. 28, 1990, and June 5,
1990. The documents clearly indicate on their face that they are
amendments, and they also state the dates upon which they were
executed.
     7
      Subsequent to decedent's death and pursuant to the terms of
the CWB Trust, three new trusts were created: The Credit Shelter
Trust, the Exempt QTIP Trust, and the QTIP Trust.
                                   - 6 -

Until the time of decedent's death, CamVic stock was the only

asset held by the trust.

     During 1969 through 1975, decedent filed gift tax returns or

amended gift tax returns on the dates listed below, which

reflected the following gifts of CamVic stock, as well as their

per-share value:


Date of     Date of Gift   No. of      Recipient           Per-share
 Gift        Tax Return    Shares       of Gift              Value

07/01/68     01/08/69          9           Ronald           $7,091.07
01/02/72     12/28/73      .3972           Ronald II        15,105.74
01/02/72     12/28/73      .3972           Cameron M.       15,105.74
01/02/72     12/28/73      .3972           Kelly Long       15,105.74
01/02/72     04/17/74      .3972           Ronald           15,105.74
12/20/72     12/28/73      .3972           Ronald II        15,105.74
12/20/72     12/28/73      .3972           Cameron M.       15,105.74
12/20/72     12/28/73      .3972           Kelly Long       15,105.74
12/20/72     04/17/74      .3972           Ronald           15,105.74
01/04/74     04/17/74      .3972           Ronald II        15,105.74
01/04/74     04/17/74      .3972           Cameron M.       15,105.74
01/04/74     04/17/74      .3972           Kelly Long       15,105.74
01/04/74     04/17/74      .3972           Ronald           15,105.74
01/01/75     05/13/75      .5294           Ronald II        11,333.30
01/01/75     05/13/75      .5294           Cameron M.       11,333.30
01/01/75     05/13/75      .5294           Kelly Long       11,333.30
01/01/75     05/13/75      .5294           Ronald           11,333.30


Ronald served as custodian for all gifts to his children who were

minors at that time.

     The above gifts left the ownership of CamVic's stock as of

January 1, 1975, as follows:


       Shareholder         Shares Owned          Percentage Owned

          CWB Trust         117.7568                    86.0
          Marcella            2.55013                    1.9
          Ronald             11.4256                     8.9
                                 - 7 -

            Cameron M.         1.721                1.3
            Ronald II          1.721                1.3
            Kelly Long         1.721                1.3


Following decedent's gifts of January 1, 1975, the ownership of

CamVic's stock remained unchanged until decedent's death on

September 10, 1990.


       CamVic's Subsidiaries

       A.   CamRon Corp.


       CamRon Corp. (CamRon) was incorporated on August 19, 1965.

Of the 1,000 shares issued, CamVic held 610, Joseph Klawitter and

Joseph Westerhaus each held 145, and Edwin Fay held 100.        The

shareholders paid $100 per share.      At the time of decedent's

death, CamRon owned several real properties in Ohio and Missouri.

See infra p. 17.

       On August 30, 1965, a Stock Retirement Agreement was

executed between CamRon and Messrs. Klawitter, Westerhaus, and

Fay.    The agreement stated that "the Corporation will herein

agree to purchase the shares of the said stock of any of the

Stockholders in the event of his death, subject to all of the

terms and provisions hereof".     CamRon would purchase the shares

of a stockholder upon his death for $100 per share.       The

agreement also provided that, in the event a shareholder desired

to sell his shares during his lifetime, he was first required to

offer the shares to the corporation at the stated price per
                                 - 8 -

share.    The agreement provided for periodic reevaluation of the

stock price, and the price per share was, in fact, modified on

several occasions.    The final modification was executed on June

29, 1977, and increased the purchase price to $300 per share.

CamVic, the majority shareholder, was not a party to the

agreement.

     On September 29, 1978, Messrs. Westerhaus and Klawitter sold

their shares to CamRon for a price of $517.24 per share, which

was in excess of the purchase price set forth in the modified

agreement.    Following the sale, CamVic held 610 shares of CamRon,

and Edwin Fay held 100 shares.      On June 30, 1982, CamVic sold to

Edwin Fay 43 shares of CamRon stock for $517.25 per share.

Following the sale, CamVic held 567 shares of CamRon (79.86

percent), and Edwin Fay held 143 shares (20.14 percent).     On this

same date, CamRon and Edwin Fay entered into an agreement whereby

Edwin Fay agreed that if he desired to sell his shares, he would

offer them first to CamRon and/or the other shareholders.


     B.    Ferguson Enterprises, Inc.

     Ferguson Enterprises, Inc. (Ferguson), was incorporated on

September 12, 1967.    Upon incorporation, its stock was held as

follows:


                 Shareholder             No. of Shares

                Edwin Fay                     2
                Joseph Westerhaus             3
                Joseph Klawitter              3
                                - 9 -

              Marcella Bommer               10
              Ronald Bommer                  2


In November 1969, CamRon purchased 500 shares of Ferguson stock

for $50,000, and the ownership of Ferguson's stock remained

unchanged through 1975.

     On November 17, 1967, Messrs. Klawitter, Westerhaus, and Fay

executed a Stock Retirement Agreement with Ferguson, the terms of

which were substantially similar to those contained in CamRon's

Stock Retirement Agreement.   On September 29, 1978, Messrs.

Westerhaus and Klawitter each sold their shares in Ferguson to

the corporation at a price of $833.33 per share, which was in

excess of the price set forth in the Stock Retirement Agreement.


2. The CamVic Buy-Sell Agreement


     On or after May 5, 1975,8 CamVic and its shareholders

executed a Buy-Sell Agreement, which provided, in pertinent part,

as follows:


          WHEREAS, the Stockholders believe that certain
     restrictions upon the transfer of all the shares of the
     Corporation as hereinafter provided will serve in the
     best interests of the Stockholders;

              *     *     *      *      *     *   *

          1. No Stockholder will sell, exchange or otherwise
     dispose of by gift or otherwise, except as hereinafter
     provided, any of the shares of the Corporation he now

     8
      Although executed at this time, the Buy-Sell Agreement was
dated Jan. 2, 1975.
                        - 10 -

owns or may hereafter acquire, nor encumber, pledge or
hypothecate any of said shares.

     2. In the event a Stockholder wishes to sell his
shares of the Corporation or any part thereof, he must
first offer to sell such shares to the Corporation at
the price and on the terms hereinafter set out in Item
3 and 4 hereof and he shall give notice to Corporation
of his desire to sell and the Corporation shall have
fourteen (14) days after receipt of such notice within
which to exercise its option. Upon failure of the
Corporation to exercise such option within such time
then the other Stockholders shall have and are hereby
given their right and option for seven (7) days
thereafter to purchase all the shares offered for sale
by the selling Stockholder in the proportion of their
stockholdings at the price and on the terms hereinafter
set forth in Items 3 and 4 hereof. If neither the
Corporation nor the other Stockholders exercise the
option hereinabove given within the time specified,
then said option shall terminate and the party desiring
to sell shall be free to sell his shares of the
Corporation to others. It is understood and agreed
that unless all of the shares which the selling
Stockholder has offered for sale are purchased by
either the Corporation or the other Stockholders
hereinafter provided, then the aforesaid option even if
exercised, shall be null and void and the Stockholder
shall be free to sell his said shares to others.

     3. The purchase price of the shares of the
Corporation to be paid by the Corporation or the
Stockholder, in the event of any sale as provided for
in Item 2 hereof, and as hereinafter set forth, shall
be $11,333.30 per share.

     4. In the event of a sale, the purchase price of
said shares shall be paid with a ten per cent (10%)
downpayment within sixty (60) days of the acceptance of
the Offer to Purchase, and the remaining balance shall
be payable in ten (10) annual installments of equal
amounts on the anniversary date of the downpayment.
The remaining balance shall bear interest at the rate
of five per cent (5%) per annum. The purchasing
Corporation or Stockholder, as the case may be, may
pre-pay the balance at any time.

     5. In the event of the death of a stockholder, he
agrees to offer his shares of stock to the Corporation
                              - 11 -

     or to the Stockholders, and said Corporation and other
     stockholders shall have the option to purchase his
     shares under the terms and conditions as set forth in
     Items 2, 3, and 4 above.

              *      *    *     *        *   *     *

          13. This Agreement may be amended or altered by
     the written consent of the holder of at least seventy-
     five percent (75%) of the issued and outstanding shares
     of the Corporation.


     At the time the Buy-Sell Agreement was executed, decedent

held a beneficial interest through the CWB Trust in 86 percent of

the outstanding stock in CamVic and had retained the right to

vote those shares.   In addition, Ronald owned 8.3 percent of the

outstanding stock in CamVic, Marcella owned 1.9 percent, and

Ronald's three children each owned 1.3 percent.   The agreement

did not provide for periodic revaluation of CamVic's stock.


     A. The Computation of CamVic's Value for Purposes of the
     Buy-Sell Agreement


    The computation of the value of CamVic stock for purposes of

the Buy-Sell Agreement was prepared by Kenneth Hughes, an

attorney and tax adviser to the Bommer family and its businesses.

Mr. Hughes and his law firm, Santen, Santen & Hughes, served as

legal counsel to all parties to the Buy-Sell Agreement.9

     The parties have stipulated that Mr. Hughes computed

CamVic's value as follows:


     9
      Mr. Hughes died in January 1993.
                             - 12 -

                    Assets                               Value

Cash & equivalents, notes & accounts receivable          $71,310
Inventory, prepaids & c.v.--insurance                     33,434
                                                       1
CamRon stock                                             474,515
Equipment                                                  2,000
Unimproved land                                          121,000
Dina Terrace & Dina Tower
  Land (at book value)                137,961
  Improvements                     1,801,084
                                                  2
Total Dina Terrace & Dina Tower                    1,939,045
Total assets                                       2,641,304
Less liabilities                                  (1,089,825)
Net asset value                                    1,551,479
Shares outstanding                                136.895553

Per-share value                                   $11,333.30

     1
      On Dec. 31, 1974, CamVic held 610 shares (61 percent) of
CamRon. For purposes of the Buy-Sell Agreement, CamRon's value
was calculated as follows:

                  Assets                                 Value

Cash & equivalents, notes & accounts receivable        $300,742
Inventory, prepaids & c.v.--insurance                     5,063
Ferguson stock                                           50,000
Equipment                                                 3,000
Mobile home park                                        300,000
Hillenbrand nursing home                                950,000
Land improvements                                        25,000
Total assets                                          1,633,805
Less liabilities                                       (855,912)
Net asset value                                         777,893
CamVic's ownership                                          61%

CamVic's equity in CamRon                             $474,515

Despite the above valuation, both parties agree that Ferguson's
stock was virtually worthless at this time.
     2
      Dina Terrace and Dina Tower are residential apartment
complexes. For purposes of his valuation, Mr. Hughes computed
the value of Dina Terrace and Dina Tower (excluding the land) by
increasing rents for 1974 by a projected 6-percent inflation to
project 1975 rents of $352,217, adding laundry income of $8,000,
deducting operating expenses of $144,087, and capitalizing (at a
                                - 13 -

12-percent rate) the projected net earnings for 1975 of $216,130.


     The computation was made during a meeting of Mr. Hughes,

decedent, and Ronald on January 2, 1975.10   Mr. Hughes completed

his computation in 1 day.   Neither the parties to the Buy-Sell

Agreement nor Mr. Hughes obtained a professional business

valuation of CamVic or a professional appraisal with respect to

the value of any of the properties owned by CamVic or its

subsidiaries prior to acceptance of the $11,333.30 per-share

price set forth in the agreement.11


     B. The Revised Agreement


     In or around April 1981, decedent, CamVic, and its minority

shareholders entered into a revised version of the Buy-Sell

Agreement (Revised Agreement).    Attorneys Kenneth Hughes and Gary

Hoffman and their law firm, Santen, Santen & Hughes, served as

legal counsel to all parties to the Revised Agreement.

     The only significant modification made in the Revised

Agreement was that paragraph 13 was changed with respect to the

percentage of stock ownership necessary to amend the terms of the

agreement.   The Revised Agreement provided that the written

     10
      None of CamVic's other shareholders participated in this
meeting.
     11
      The only professional appraisal used in the computation
was an appraisal of an unimproved parcel of land owned by CamVic,
which had been appraised at $121,000 approximately 2 years
earlier on May 7, 1973.
                                  - 14 -

consent of the holders of at least seven-eighths (87.5 percent)

of CamVic's stock was necessary to amend the terms of the Buy-

Sell Agreement.12

     On two pages of contemporaneous, handwritten notes relating

to the 1981 revision of the Buy-Sell Agreement, an attorney with

Santen, Santen & Hughes recorded the following:


     [On page 1] Addendum @ para 13 changed
     75% control to 7/8 rather than .875
     purpose is to set estate tax value; * * *

          *    *      *      *    *    *      *

     [On page 2] purpose we want $11k/sh value @ death
     * * *[13]



     The Revised Agreement did not permit decedent to amend its

terms unilaterally.       Nevertheless, it permitted him to amend them

with his wife Marcella's consent.14        Moreover, if Marcella

predeceased him, decedent could have acquired the requisite

percentage of stock through the purchase option and then would




     12
      The original Buy-Sell Agreement permitted the holder of 75
percent of CamVic stock to amend the terms of the agreement.
     13
      These quotes are excerpts. The other portions of the
notations deal with the Bommer family wills and trusts and the
CamVic Buy-Sell Agreement.
     14
      The record indicates that Marcella did not take an active
role in CamVic's affairs.
                              - 15 -

have been able to amend the terms of the Revised Agreement

unilaterally.15

     The Revised Agreement did not change the $11,333.30 per-

share purchase price for the CamVic stock, nor did it contain a

provision requiring reevaluation of the stock price.    The parties

did not negotiate with respect to the price per share before

entering into the Revised Agreement.   The Revised Agreement was

titled "Buy-Sell Agreement", the same as the agreement executed

in 1975.   It provided at the outset that it was "made and entered

into as of the 2nd day of January, 1975".   In addition, Ronald

signed the Revised Agreement as the custodian for each of his

children, although he was no longer the custodian of Cameron M.

or Ronald II in 1981, and he signed the agreement as the

secretary of CamVic, his position in January 1975.    In 1981,

however, Ronald was CamVic's corporate president.    Similarly,

decedent signed the Revised Agreement as president of CamVic--his

position in 1975--even though decedent was corporate secretary in

1981.16

     15
       Decedent would have had 87.5 percent of CamVic's stock had
either he or CamVic exercised the right to purchase Marcella's
stock.
     16
      None of decedent's grandchildren had signed the original
Buy-Sell Agreement. However, his grandchildren's signatures
appear on the Revised Agreement. The grandchildren did not date
their signatures on the Revised Agreement; rather, Ronald
inserted the dates. Cameron M.'s signature is dated Apr. 26,
1978, the date of his 18th birthday, which fell approximately 3
years before the execution of the Revised Agreement. Ronald II's
                                                   (continued...)
                                        - 16 -


3.   CamVic's and CamRon's Real Property Holdings


      CamVic owned the following real properties during the time

periods relevant to this case:


                                                             1975 Property     1981 Property
                          Owned in    Owned in     Owned    Hamilton County   Hamilton
County
     Property             May 1975   April 1981   in 1990    Tax Valuation1   Tax Valuation

Dina Terrace
  Cincinnati, Ohio           Y          Y           Y          $557,700         $737,240

Dina Tower
  Cincinnati, Ohio           Y          Y           Y           164,570          215,450

1.7954 acres
  Boudinot Ave.
  Cincinnati, Ohio2         Y          Y           Y            18,360               22,990

Condominium in
  Gulf's Harbor's
  Condominiums
  New Port Richey, Florida3 N          Y           N             --                    --

Victory Tower
  Cincinnati, Ohio4         N          Y           N             --              5
                                                                                     300,941

3 commercial properties
Jacksonville, Florida        N          N           Y             --                   --

Apartments
  Cincinnati, Ohio           N          N           Y             --                   --

Apartments
  Batesville, Indiana        N          N           Y             --                   --

Commercial property
  Heath, Ohio                N          N           Y             --                   --


      1
       The record contains valuations only for properties located in Hamilton
County, Ohio. Hamilton County computes the assessed valuation of real property
by multiplying the county's estimate of market value by 35 percent.
      2
        On Oct. 16, 1990, CamVic made a partial sale of the Boudinot land for
$72,093; it had acquired the entire property on Nov. 12, 1958, for $3,311.



      16
      (...continued)
signature is dated Aug. 15, 1979, the date of his 18th birthday,
which fell approximately 2 years before the execution of the
Revised Agreement.
                                            - 17 -
      3
        CamVic purchased this condominium in 1977 for $25,500 and sold it in May
1985 for $42,550.
      4
        Victory Tower was acquired on June 15, 1979, for $750,000 and sold on
Mar. 20, 1986, for $1,050,000.
      5
        CamVic successfully protested Victory Tower's 1981 Hamilton County tax
valuation, and the county revised its assessed tax valuation from $300,940 to
$280,000.


      During these same years, CamRon owned the following real

properties:
                                                                1975 Property     1981 Property
                           Owned in   Owned in       Owned     Hamilton County   Hamilton County
      Property             May 1975   April 1981     in 1990   Tax Valuation     Tax Valuation

Hillenbrand nursing Ctr.
  Cincinnati, Ohio           Y          Y            Y         $241,970           $319,660

Martin mobile park home
  Cincinnati, Ohio           Y          Y            Y          unknown            unknown

Apartments (Lakeview)
  Cincinnati, Ohio1         N          Y             Y            --              134,000

Commercial property
  Middletown, Ohio           N          N            Y             --                 --

Commercial property
  St. Louis, Missouri        N          N            Y             --                 --

      1
       CamRon acquired four apartment buildings on June 30, 1975, for $285,000 and
sold one of these buildings on Nov. 15, 1988, for $140,000.


4. Decedent's Death and Subsequent Events


      Decedent died on September 10, 1990.                     The parties have

stipulated that 117.7568 shares of CamVic stock, which he

beneficially owned through the CWB Trust, were includable in his

gross estate pursuant to section 2036(a).
                                         - 18 -

     On November 26, 1990, the following transfers of CamVic stock

occurred:17

    Transferor                   Transferee           No. of Shares      Payment Method
                                                                                1
 CWB Trust                   Estate of Cameron W.         9.8647
                               Bommer
                                                                                1
 CWB Trust                   Credit shelter trust        47.001
                                                                                1
 CWB Trust                   Exempt QTIP trust           14.0204
                                                                                1
 CWB Trust                   QTIP trust                  46.47
 Estate of Cameron W.        CamVic                       9.8647               Cash
   Bommer
 Credit shelter trust        CamVic                       6.3059               Cash

     1
         Transferred pursuant to terms of the trust rather than sales.


     On December 1, 1990, the following transfers of CamVic stock

took place:

      Transferor                 Transferee            No. of Shares       Payment Method

 Credit shelter trust        Ronald                       6.5002             Cash/Note
 Credit shelter trust        Cameron M. GC trust         16.2048             Cash/Note
 Credit shelter trust        Kelly Long GC trust         16.2048             Cash/Note
 Credit shelter trust        Ronald II GC trust           2.1844             Cash/Note
 Exempt QTIP trust           Ronald II GC trust          14.0204             Cash/Note
 QTIP trust                  CamVic                      46.4716             Cash/Note
 Marcella                    CamVic                       2.55013            Cash


Pursuant to the terms of the Buy-Sell Agreement, the transfer price

was $11,333.30 per share.             Payments which consisted of a combination

of cash and a promissory note were made pursuant to the following

terms:      A 10-percent cash downpayment and a promissory note to pay

10 annual installments with the unpaid balance accruing interest at

a 5-percent annual rate.



     17
      In addition, Kelly Long transferred her 1.7210 shares of
CamVic to the Kelly Long GC Trust, Cameron M. transferred his
1.7210 shares to the Cameron M. GC Trust, and Ronald II
transferred his 1.7210 shares to the Ronald II GC Trust. All
three transfers were made on Nov. 26, 1990.
                               - 19 -

     Subsequent to these transfers, there were 71.703223 outstanding

shares of CamVic stock, which were owned as follows:


     Shareholder          No. of Shares      Percentage Held

  Ronald                    17.9258               25
  Cameron M. GC trust       17.9258               25
  Kelly Long GC trust       17.9258               25
  Ronald II GC trust        17.9258               25


     Respondent refused to accept petitioners' $11,333.30 per-share

valuation of decedent's beneficial interest in 117.7568 shares of

CamVic stock as reported on Schedule G of the Federal estate tax

return.   In the notices of deficiency in these cases, respondent

determined that the fair market value of the shares of CamVic stock

includable in decedent's gross estate was $75,278.22 per share.

Consequently, respondent increased decedent's gross estate in the

amount of $7,529,951.


                               OPINION


     The only issue we address in this opinion is the effect, if

any, of CamVic's restrictive stock agreement on the value of the

CamVic stock includable in decedent's gross estate pursuant to

section 2036(a).

     The gross estate includes the value of all property to the

extent of the decedent's interest therein at the time of his death.

Estate of Smith v. Commissioner, 108 T.C. ___, ___ (1997) (slip op.

at 11).   The standard for valuation is fair market value, which is
                                 - 20 -

defined as "'the price at which the property would change hands

between a willing buyer and a willing seller, neither being under

any compulsion to buy or to sell and both having reasonable

knowledge of relevant facts.'"     United States v. Cartwright, 411

U.S. 546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax

Regs.).     The determination of fair market value is a question of

fact.    Estate of Newhouse v. Commissioner, 94 T.C. 193, 217 (1990);

Estate of Gilford v. Commissioner, 88 T.C. 38, 50 (1987).     If the

relevant property is stock that is not listed on any exchange, and

cannot be valued with reference to bid and asked prices or

historical sales prices, the value of listed corporations engaged in

the same or a similar line of business should be considered.     Sec.

2031(b).

        The value of corporate stock may be limited for Federal estate

tax purposes as a result of an enforceable buy-sell agreement or

option contract which fixes the price at which the stock may be

offered for sale to the remaining shareholders.    See, e.g., St.

Louis County Bank v. United States, 674 F.2d 1207, 1210 (8th Cir.

1982); May v. McGowan, 194 F.2d 396, 397 (2d Cir. 1952); Lomb v.

Sugden, 82 F.2d 166, 167 (2d Cir. 1936); Wilson v. Bowers, 57 F.2d

682, 684 (2d Cir. 1932); Estate of Gloeckner v. Commissioner, T.C.

Memo. 1996-148; Estate of Lauder v. Commissioner, T.C. Memo. 1992-

736; Rudolph v. United States, 71 AFTR 2d 93-2169, 93-1 USTC par.

60,130 (S.D. Ind. 1993).
                                - 21 -

     Courts have developed a set of requirements for determining

whether the price set forth in a restrictive agreement controls for

purposes of the Federal estate tax.      In Estate of Lauder v.

Commissioner, supra, we summarized these requirements:


     It is axiomatic that the offering price must be fixed and
     determinable under the agreement. In addition, the
     agreement must be binding on the parties both during life
     and after death. Finally, the restrictive agreement must
     have been entered into for a bona fide business reason and
     must not be a substitute for a testamentary disposition.
     [Citations omitted.]


See also St. Louis County Bank v. United States, supra at 1210;

Estate of Gloeckner v. Commissioner, supra.

     We will first analyze the original Buy-Sell Agreement under the

standard set forth in Estate of Lauder v. Commissioner, supra.

Respondent concedes that the Buy-Sell Agreement established a fixed

and determinable price for the stock.     Thus, we shall focus on the

remaining three requirements.

     The first requirement is whether decedent was bound by the

terms of the original Buy-Sell Agreement executed in May 1975.

Petitioners maintain that it was not intended that decedent would

have the unilateral ability to amend the terms of the Buy-Sell

Agreement.   Petitioners argue that the original agreement controls,

since, in their view, the purpose of the Revised Agreement was

simply to correct a "scrivener's error"; i.e., the percentage of

stock ownership necessary to alter the terms of the agreement.    The

parties agree that the only significant change produced by the
                               - 22 -

Revised Agreement was the percentage of stock ownership necessary to

change the terms of the agreement.

     Petitioners argue that the original Buy-Sell Agreement was a

binding contract enforceable under Ohio State law.   Respondent

maintains that section 20.2031-2(h), Estate Tax Regs., sets forth

the applicable standard for determining whether a restrictive stock

agreement is controlling for estate tax purposes.    This regulation

provides that "Little weight will be accorded a price contained in

an option or contract under which the decedent is free to dispose of

the underlying securities at any price he chooses during his

lifetime."   Sec. 20.2031-2(h), Estate Tax Regs.; see also Estate of

Matthews v. Commissioner, 3 T.C. 525, 528-529 (1944); Hoffman v.

Commissioner, 2 T.C. 1160, 1178-1179 (1943), affd. sub nom. Giannini

v. Commissioner, 148 F.2d 285 (9th Cir. 1945).   Respondent asserts

that the original Buy-Sell Agreement was not binding on decedent

during his lifetime because he had the power to unilaterally alter

its terms.   We agree.

     The original Buy-Sell Agreement, executed in May 1975,

expressly provided that "This Agreement may be amended or altered by

the written consent of the holder of at least seventy-five percent

(75%) of the issued and outstanding shares of the Corporation."

Decedent owned a beneficial interest (via the CWB Trust) in 86

percent of CamVic's outstanding stock on the date the Buy-Sell

Agreement was executed and for the remainder of his life.    This

beneficial interest included the right to vote the shares.    Thus,
                               - 23 -

the plain wording of the Buy-Sell Agreement leaves no question as to

the unilateral authority that decedent possessed.     Decedent

singlehandedly could have altered the price-per-share clause, as

well as any other terms of the agreement.

     Ronald testified that the parties to the original agreement

never intended that decedent should have the unilateral right to

amend and that, in 1981 (6 years later), Ronald discovered this

"error" in the agreement.   We cannot accept this explanation.      The

evidence indicates that decedent was a man who liked to control his

affairs.   In 1975, he was 62 years old and in good health.      The

language of the agreement is clear.     It was signed in 1975 by

decedent, Ronald, and Kenneth Hughes.     Mr. Hughes prepared the

agreement and was also the trustee of the CWB Trust.     We have no

doubt that decedent, Ronald, and the attorneys at Santen, Santen &

Hughes recognized that the agreement gave decedent the authority to

amend the agreement.   Under these circumstances, we need not, and do

not, accept Ronald's self-serving and uncorroborated testimony that

the 1981 change was simply a correction of a scrivener's error in

the 1975 Buy-Sell Agreement.   See Tokarski v. Commissioner, 87 T.C.

74, 77 (1986).

     Petitioners assert that the agreement is valid for estate tax

purposes even if decedent had the power to change its terms.

Petitioners contend that our decision in Estate of Bischoff v.

Commissioner, 69 T.C. 32 (1977), supports their position.        In Estate

of Bischoff v. Commissioner, supra at 42, we found that a
                                - 24 -

partnership's restrictive buy-sell provisions were not merely a

substitute for a testamentary disposition to the natural objects of

each decedent's bounty.   In doing so, we rejected the Commissioner's

argument that the partnership agreement could have been amended to

circumvent the restrictive buy-sell provisions.    Petitioners

maintain that our observation in a footnote in Estate of Bischoff v.

Commissioner, supra at 42 n.10, that the provisions of the agreement

were adhered to following the deaths of several partners (including

the decedents) indicates that an agreement will be respected for

estate tax purposes so long as the parties adhere to its terms.    We

disagree.   In Estate of Bischoff v. Commissioner, supra at 36, the

two decedents, who were husband and wife, owned partnership

interests of only 12.5 percent and 14.286 percent, respectively, at

their deaths.18   In addition, although one of the decedents was the

sister of another of the partners, we noted that "respondent does

not contend that the Bischoff and Brunckhorst families were the

natural objects of each other's bounty.   Moreover, there is no

evidence which would support such a contention."    Id. at 42 n.10.

In the instant case, in contrast, the terms of the original Buy-Sell

Agreement expressly provided that decedent possessed the authority

to alter the agreement's terms at any time, and the natural objects

of decedent's bounty were the other shareholders of CamVic stock.

     18
      Since the partnership generally retired each partner's
interest upon his withdrawal or death, the interests owned by the
decedents at their deaths were presumably their largest. See
Estate of Bischoff v. Commissioner, 69 T.C. 32, 36 (1977).
                                  - 25 -

     Petitioners argue that decedent would have breached his

fiduciary duty to the other CamVic shareholders if he had

unilaterally altered the provisions of the agreement to his

advantage and the minority shareholders' detriment.       As a result,

petitioners contend that the agreement, despite its literal terms,

was nevertheless binding on decedent during his lifetime.

Petitioners' argument is unpersuasive, as it is certainly not a

breach of any fiduciary duty for a majority shareholder to sell his

stock at the highest price possible.       The original Buy-Sell

Agreement provided decedent with the ability to amend the agreement

in order to reflect a contemporary per-share price at which the

corporation would purchase a shareholder's stock upon his withdrawal

or at death.

     The next issue is whether the terms of the Revised Agreement

executed in 1981 were binding on decedent.       Pursuant to the Revised

Agreement, the holders of at least 87.5 percent of CamVic stock

could alter the terms of the agreement.       While decedent held a

beneficial interest in only 86 percent of the corporation's stock,

his wife Marcella owned an additional 1.9 percent.       Marcella did not

actively participate in the affairs of the corporation.       With

Marcella's interest, decedent would have held the requisite amount

of stock ownership to alter the agreement.       Decedent also could have

gained the required percentage if Marcella had predeceased him.19        We

     19
          Had Marcella died, her stock would also have been subject
                                                         (continued...)
                               - 26 -

note that decedent's son, Ronald, and Ronald's three children, i.e.,

those shareholders with interests presumably adverse to the

interests of an older majority shareholder, never had the ability by

themselves to prevent decedent from amending the Revised Agreement.

We view the Revised Agreement as an attempt to remedy an estate tax

problem, while at the same time allowing decedent to retain the

effective ability to alter the terms of the Revised Agreement.

     For the foregoing reasons, we hold that neither the original

Buy-Sell Agreement nor the Revised Agreement was binding on decedent

during his lifetime.   Nevertheless, even assuming that either

agreement is construed as binding, petitioners still would not

prevail because, as explained later, we believe that the Buy-Sell

Agreement and Revised Agreement were testamentary devices to

transfer decedent's interest in CamVic's stock to the natural

objects of his bounty.

     Section 20.2031-2(h), Estate Tax Regs., provides, in relevant

part:


     Even if the decedent is not free to dispose of the
     underlying securities at other than the option or contract
     price, such price will be disregarded in determining the
     value of the securities unless it is determined under the
     circumstances of the particular case that the agreement
     represents a bona fide business arrangement and not a
     device to pass the decedent's shares to the natural

     19
      (...continued)
to the Buy-Sell Agreement. Had either CamVic or decedent
(through the CWB Trust) exercised the option rights to purchase
Marcella's shares, decedent would have controlled over 87.5
percent of the shares.
                              - 27 -

     objects of his bounty for less than an adequate and full
     consideration in money or money's worth. * * *


As the language indicates, for the price set forth in the agreement

to control, the agreement must serve a bona fide business purpose

and also must not constitute a testamentary device.   Estate of

Gloeckner v. Commissioner, T.C. Memo. 1996-148; Estate of Lauder v.

Commissioner, T.C. Memo. 1992-736.   Since the issues are

interrelated, we will consider them in tandem.

     Legitimate business purposes are often inextricably mixed with

testamentary objectives where, as here, the parties to a restrictive

stock agreement are all members of the same immediate family.

Estate of Lauder v. Commissioner, supra; see also 5 Bittker &

Lokken, Federal Taxation of Income, Estates and Gifts, par.

135.3.10, at 135-59 to 135-60 (2d ed. 1993).   Accordingly,

intrafamily agreements restricting the transfer of stock in a

closely held corporation are subject to greater scrutiny than that

given to similar agreements between unrelated parties.      Dorn v.

United States, 828 F.2d 177, 182 (3d Cir. 1987); Harwood v.

Commissioner, 82 T.C. 239, 259 (1984), affd. without published

opinion 786 F.2d 1174 (9th Cir. 1986); Estate of Lauder v.

Commissioner, supra.

     Petitioners raise several business purposes which they contend

were furthered by the Buy-Sell Agreement.   First, they maintain that

the agreement was intended to preserve family control within the

group consisting of the CamVic shareholders.   The preservation of
                               - 28 -

family ownership and control of a corporation has been recognized in

certain cases as a legitimate business purpose.   See Estate of

Bischoff v. Commissioner, 69 T.C. at 39-40; Estate of Littick v.

Commissioner, 31 T.C. 181, 187 (1958); Estate of Lauder v.

Commissioner, supra.

     Petitioners also assert that the Buy-Sell Agreement was

intended to prevent Ronald from leaving CamVic.   Respondent contends

that the evidence fails to demonstrate that Ronald was uniquely

qualified for any of his responsibilities at CamVic such that there

was a bona fide business need to retain him.

     Ronald began working for CamVic in 1959.   Ronald testified that

he supervised the construction of Dina Terrace, and he drew the

plans for and supervised the construction of Dina Tower.   When these

apartments were completed, Ronald managed the properties for CamVic.

Moreover, Ronald testified that he and decedent had conflicting

business philosophies.   Ronald stated that he believed CamVic should

build and manage properties, whereas decedent had a build and sell

philosophy.   Ronald further testified that decedent had previously

made impulsive business decisions which Ronald believed were to the

detriment of CamVic.   For instance, Ronald testified that decedent

had constructed a golf course on land unsuitable for that purpose,

purchased a mobile home park in a flood plain at a price above the

land's appraised value, and insisted on purchasing nearly 4 acres of

land for a car wash when a half acre was sufficient.   Ronald stated
                                 - 29 -

that these concerns prompted him to approach Mr. Hughes, who, in

turn, suggested the efficacy of a restrictive stock agreement.

     Following our review of the record, we find that Ronald's

retention played some part in the creation of the Buy-Sell

Agreement.     At the time the agreement was created, Ronald was

relatively young and had already worked at CamVic for over 20 years.

During that time, he had gained solid experience through his work

with CamVic's properties.     Ronald also had concerns with respect to

his security in the business.     Under these circumstances, we

conclude that it was reasonable for Ronald to attempt to solidify

his future at CamVic through the creation of a restrictive stock

agreement.20    We find that there was some business purpose for

entering into the Buy-Sell Agreement and the Revised Agreement.

     In order to meet the test set forth in section 20.2031-2(h),

Estate Tax Regs., and applied in Estate of Lauder v. Commissioner,

supra, petitioners must also demonstrate that the agreement was not

intended as a device to pass decedent's interest in CamVic to the

natural objects of his bounty for less than an adequate and full

consideration in money or money's worth.     Petitioners have failed to

do this.   For the reasons set forth below, we conclude that an

inference may fairly be drawn that the Buy-Sell Agreement and the


     20
      Nevertheless, we note that nothing in the Buy-Sell
Agreement prevented Ronald from leaving CamVic or decedent from
continuing to make "impulsive" business decisions. Decedent had
the controlling interest in CamVic and could have caused CamVic
to buy or sell properties.
                                - 30 -

Revised Agreement were designed to serve such a testamentary

purpose.

     First, the purchase price set forth in the agreements was fixed

at $11,333.30 per share.   It was not subject to any periodic

reevaluation in order to account for an increase in CamVic's value.

We find it unrealistic to assume that decedent, as the majority

shareholder, would have negotiated a fixed price for the agreements

if he had been bargaining with unrelated parties.21

     Petitioners argue that the Buy-Sell Agreement was not a

testamentary device because real estate values fluctuate and

decedent had personally experienced these fluctuations in his own

business.    We fail to see how concern about the fluctuation in the

value of real estate or CamVic's shares could have been a

nontestamentary purpose for decedent to have agreed to a fixed price

per share.   The Buy-Sell Agreement granted a purchase option; it did

     21
      We note that decedent was a general partner in the Oak
Hills Investment Co. The partnership agreement, dated May 25,
1983, contained a similar restrictive transfer provision, which
generally required the partners--if they desired to sell their
interests in the partnership--to offer their interests to the
partnership and then to the other partners pro rata. However,
unlike the provision in CamVic's Buy-Sell Agreement, the
partnership agreement's provision provided:


     the purchase price for said sale shall be the
     transferring Partner's pro-rata share of the appraised
     value of the net assets of the Partnership which shall
     be equal to that percentage of ownership of the
     withdrawing Partner times the fair market value of the
     assets owned by the Partnership at the time notice is
     given minus all debts and liabilities of the
     Partnership. * * *
                                - 31 -

not require CamVic or the other shareholders to buy the shares if

tendered.    If the value of the shares declined, below $11,333.30,

the rights to buy shares pursuant to the agreement would not be

exercised.   Therefore, neither decedent nor his estate was protected

in the event of declining values.    On the other hand, if the value

of real estate in general, and CamVic in particular, rose, neither

decedent nor his estate could sell the controlling interest in

CamVic for more than $11,333.30.    The only beneficiaries of an

increase in the value of CamVic's stock were the natural objects of

decedent's bounty.

     In addition to the fixed price per share, the generous payment

terms of the Buy-Sell Agreement and the Revised Agreement are a

further indication of their testamentary nature.    Under the

agreements, payments could be made pursuant to the following terms:

A 10-percent cash downpayment and a promissory note to pay 10 annual

installments with the unpaid balance accruing interest at a 5-

percent annual rate.    Petitioners' own expert witness stated that in

the first half of 1975 banks were not granting loans to borrowers

who had less than an AAA credit history, and the interest rate on

business loans in excess of $1 million during this period was 11.81

percent.    He also stated that in 1981 the prime interest rate

exceeded 21 percent.    Based on these figures, purchasers of CamVic

under the agreements enjoyed the benefit of an interest rate that

was less than one-half of the rate for 1975 and less than one-fourth

of the rate for 1981.
                               - 32 -

     We are also unpersuaded that decedent was anticipating a

decline in value.   There is no credible evidence suggesting that

CamVic's value was declining at the time the original Buy-Sell

Agreement was executed in 1975 or in 1981.   Indeed, valuations of

CamVic stock made between 1969 and 1974 indicate that CamVic's value

was actually increasing during this time.    On a gift tax return

filed January 8, 1969, decedent reported the value of 9 shares of

CamVic stock that he had gifted to Ronald at $7,091.07 per share.

When CamVic later merged on June 21, 1971, with two other

corporations owned by the Bommer family, the value of CamVic's stock

for purposes of computing the exchange ratio for the merger was

$14,192.45 per share.   In addition, between 1972 and 1974, decedent

made several gifts of CamVic stock to Ronald and his grandchildren.

Each gift was valued for gift tax purposes at $15,105.74 per share.22

     Second, an inference of testamentary device can be drawn from

the manner in which the parties selected the $11,333.30 price per

share for the purchase of CamVic stock.   Decedent was an experienced

businessman, yet he failed to obtain a professional appraisal of

CamVic, its subsidiaries, or its real properties.   Instead, decedent

did nothing more than consult with his attorney Mr. Hughes.

Decedent and Ronald had one meeting with Mr. Hughes, who completed

his computation, upon which the above price per share was based, in

     22
      With respect to the period from 1975 until approximately
April 1981, when the Revised Agreement was executed, CamVic's
increasing value is not disputed by petitioners or their expert
witness.
                                 - 33 -

1 day.    No bona fide negotiations occurred with respect to the stock

price, as Mr. Hughes and his law firm represented all parties to the

Buy-Sell Agreement.   Instead, the parties selected a value of

$11,333.30 per share, a price which was approximately $4,000 less

than the value decedent had reported for every gift of CamVic stock

he made between 1972 and 1974.

     In Estate of Lauder v. Commissioner, T.C. Memo. 1992-736, which

was similar in this respect, we found that a restrictive stock

agreement was intended as a substitute for a testamentary

disposition.   In Estate of Lauder, we explained:


     We are most concerned with the arbitrary manner in which
     Leonard, an experienced businessman, adopted the adjusted
     book value formula for determining the purchase price of
     the stock under the agreements. Leonard admitted that he
     arrived at the formula without a formal appraisal and
     without considering the specific trading prices of
     comparable companies. Nor does it appear that Leonard
     obtained any significant professional advice in selecting
     the formula price. Leonard settled on the book value
     formula himself after consulting with Arnold M. Ganz (a
     close family financial adviser now deceased). * * *[23]


     No revaluation of CamVic stock occurred in 1981 prior to

execution of the Revised Agreement.       Rather, the parties to the

Revised Agreement simply reiterated the $11,333.30 price.      Notes of

an attorney with Santen, Santen & Hughes in 1981 indicate that the


     23
      In contrast, we note that CamRon's and Ferguson's Stock
Retirement Agreements provided for periodic reevaluation of the
stock price, and the majority shareholders of these corporations,
i.e., CamVic and CamRon, respectively, were not parties to these
agreements.
                                - 34 -

purpose of the 1981 Revised Agreement was to set the estate tax

value.

     On brief, petitioners argue that these notes provide no insight

into decedent's intent, as the attorney who made the notes never met

with decedent personally.    We disagree.   Petitioners have stipulated

that the attorney's notes relate to the 1981 revision of the Buy-

Sell Agreement.   Mr. Hughes and his law firm, Santen, Santen &

Hughes, were decedent's longtime attorneys, and they represented all

parties to the original Buy-Sell Agreement in 1975, as well as the

Revised Agreement in 1981.    The Santen, Santen & Hughes attorneys

served as decedent's advisers in this matter, and the notes made by

an attorney with the firm at that time were business records of the

firm.24   As a result, we find that the notes are relevant in

establishing the purpose behind the execution of the Revised

Agreement.25




     24
      As a result of a pretrial discovery request by respondent,
the notes were retrieved from storage by the law firm and given
to petitioners. Petitioners then objected to disclosure to
respondent on the basis of attorney-client privilege. In a
pretrial order, we found that petitioners had waived any
attorney-client privilege and ordered petitioners to produce the
notes. See Bernardo v. Commissioner, 104 T.C. 677 (1995).
     25
      Petitioners argue that there is nothing to indicate that
the attorney's notes are relevant to decedent's intent. We find
that the notes revealing the objectives of the attorneys for
decedent are probative of decedent's intent. The attorneys were
acting on behalf of decedent and trying to achieve his
objectives. It is unrealistic to think that the concerns
revealed in these notes were not shared with and concurred in by
decedent.
                                - 35 -

     Third, we believe that the Revised Agreement was misleading

with regard to the date of execution.    The 1981 Revised Agreement

was titled "Buy-Sell Agreement" and stated at the outset that it was

"made and entered into as of the 2nd day of January, 1975", which

was the date of the original Buy-Sell Agreement.   Nothing in the

Revised Agreement states that it was a revision of a prior

agreement.   Ronald signed the agreement as the custodian for each of

his three children, although by 1981 he was no longer the custodian

of two of them.   The agreement contains the signatures of Ronald's

children, Cameron M., Ronald II, and Kelly Long with the respective

dates April 26, 1978, August 15, 1979, and April 6, 1982.    These

dates are the dates of their respective 18th birthdays.    Ronald

wrote these dates on the Revised Agreement, despite the fact that

two of the dates precede the creation of the document.    Ronald

signed the Revised Agreement as secretary of CamVic, despite the

fact that his position in 1981 was corporate president, and decedent

signed as president of CamVic even though he was corporate secretary

in 1981.    Decedent and his attorneys knew how to execute amendments

by providing the correct date and identifying the document as a

revision.    Indeed, the record indicates that they did just that when

they amended the CWB Trust on several different occasions.26



     26
      When respondent began the audit of the estate tax return,
Ronald failed to disclose that the agreement had been revised in
1981. At trial, Ronald testified that he "just didn't remember
it at all."
                                 - 36 -

       Petitioners argue that courts have upheld fixed price

agreements in similar circumstances and that case law supports their

position.    We disagree.   The facts in the present case are clearly

distinguishable from those in cases where fixed price agreements

were upheld.    For instance, in Estate of Littick v. Commissioner, 31

T.C. at 185, a corporation purchased the decedent's shares at death

pursuant to a buy-sell agreement for a price that was less than the

stock's fair market value on the date of the decedent's death.      In

holding the agreement controlling for estate tax valuation purposes,

we stated that "there is nothing in the record to indicate that the

$200,000 figure was not fairly arrived at by arm's-length

negotiation or that any tax avoidance scheme was involved."       Id. at

186.   In Estate of Littick, the corporation had three shareholders

who held almost equal shares, and this Court was convinced that the

agreement was the product of arm's-length bargaining.    In the

instant case, in contrast, the Buy-Sell Agreement was executed

following a single meeting among decedent, who was an 86-percent

majority shareholder, Ronald, and Mr. Hughes, decedent's longtime

attorney who represented all parties to the agreement.    In addition,

we have already noted the extensive evidence of testamentary device

present in this case.

       In Rudolph v. United States, 71 AFTR 2d 93-2169, 93-1 USTC par.

60,130 (S.D. Ind. 1993), a buy-sell agreement which required a

corporation to purchase the decedent's shares at death for $1,000

per share was held to control the value for estate tax purposes.
                                - 37 -

However, the facts in Rudolph are distinguishable.    First, the

agreement at issue in Rudolph provided for review of the stock

purchase price at the annual stockholders meeting.    In addition, the

District Court found that there was no intent to escape the payment

of estate taxes; there was no evidence in the record with respect to

any discussion of the tax consequences that would result from the

buy-sell agreement.    Id. at 93-2179, 93-1 USTC at 88,452.27

     Finally, petitioners argue on brief that if decedent's purpose

in entering into the Buy-Sell Agreement was testamentary, he would

not have agreed to restrict his right to make gifts of his shares to

family members.   Petitioners contend that decedent could have

achieved significant estate tax savings by making annual gifts

during the 15 years after the Buy-Sell Agreement was executed until

his death in 1990.    Petitioners' argument misses the mark, as they

fail to recognize that continuous gifts over such a sustained period

would have ultimately deprived decedent of his controlling interest

in CamVic.   This would have been unacceptable to decedent, whom

petitioners describe on brief as "a controlling person in his

     27
      Petitioners' reliance on several other cases is similarly
misplaced. In Wilson v. Bowers, 57 F.2d 682 (2d Cir. 1932), the
Court of Appeals for the Second Circuit did not even address the
issue of testamentary device. In May v. McGowan, 194 F.2d 396,
397 (2d Cir. 1952), the Court of Appeals for the Second Circuit
stated that "here the district court found that there was no
purpose to evade taxes." In Bensel v. Commissioner, 36 B.T.A.
246 (1937), affd. 100 F.2d 639 (3d Cir. 1938), the Board of Tax
Appeals found that the option was not a substitute for
testamentary disposition or a device for avoiding tax. The Board
also found that the final price per share had resulted from
genuine arm's-length negotiations.
                                 - 38 -

business and in his personal life."       We hold that decedent had a

testamentary purpose in entering into both the 1975 and 1981

agreements.

     Petitioners argue that the existence of a testamentary intent

should not be determinative if the price in the Buy-Sell Agreement

represented the fair market value on the date the agreement was

executed, citing Estate of Lauder v. Commissioner, T.C. Memo. 1992-

736, and Estate of Bischoff v. Commissioner, 69 T.C. 32 (1977).

Respondent argues that cases such as Estate of Lauder and Estate of

Bischoff involved formula prices that accounted for variations in

future value and are distinguishable from fixed price agreements.

We need not decide this point, because we find that petitioners have

not proven that $11,333.30 was the fair market value for a share of

CamVic in either 1975 or 1981.

     Where shareholders are members of the same family and the

circumstances indicate that testamentary considerations influenced

the decision to enter into a restrictive stock agreement, an

assumption that the price stated in the agreement is a fair one is

unwarranted.    It is then incumbent upon the estate to demonstrate

that the agreement establishes a fair price for the subject stock.

Estate of Gloeckner v. Commissioner, T.C. Memo. 1996-148; Estate of

Lauder v. Commissioner, supra.    Such is petitioners' burden in the

instant case.

     Both parties presented expert evidence regarding the value of

CamVic on the respective 1975 and 1981 dates of the two agreements.
                                - 39 -

Although expert opinions can assist the Court in evaluating a claim,

we are not bound by the opinion of any expert and may reach a

decision based on our own analysis of all the evidence in the

record.   Helvering v. National Grocery Co., 304 U.S. 282, 295

(1938); International Multifoods Corp. v. Commissioner, 108 T.C. 25,

46-47 (1997).   Questions of value are an inherently imprecise

exercise.   Messing v. Commissioner, 48 T.C. 502, 512 (1967); Estate

of Lauder v. Commissioner, supra.

     Petitioners rely upon the expert reports and testimony of

Matthew G. Kimmel, a national director in the Chicago, Illinois,

office of Arthur Andersen's Valuation Services Group.   Mr. Kimmel is

a licensed realtor in the State of Indiana and a certified general

real estate appraiser in several States.

     In the instant case, Mr. Kimmel relied upon the income and cost

approaches in determining CamVic's fair market value in 1975 and

1981.28   In his report which was introduced at trial, Mr. Kimmel

     28
      There are three generally accepted methods of determining
the value of stock: The market comparison approach, the income
approach, and the cost approach. Fishman, "Valuation Termination
and Methodology", in Financial Valuation: Businesses and
Business Interests, par. 2.7 (Zukin ed. 1990). Under the market
comparison approach, the value of a company's stock is determined
by comparison to the stock of similar companies with publicly
traded stock. Under the cost (or asset-based) approach, the
value of stock is equal to the fair market value of the company's
assets less the total amount of its liabilities. Finally, under
the income approach, the value of stock is equal to the present
value of a company's future income stream. See id. pars. 2.7-
2.10; see also Morton v. Commissioner, T.C. Memo. 1997-166. With
respect to the market approach, Mr. Kimmel's report stated that
it was considered but not relied upon in the determination of
                                                      (continued...)
                               - 40 -

concluded that the fair market value of CamVic using the cost

approach was $948,000 or $6,925 per share as of May 31, 1975, and

$2,248,400 or $16,424 per share as of April 30, 1981.29    Applying the

income approach and, in particular, the discounted debt-free cash-

flow method, Mr. Kimmel concluded that CamVic's fair market value

was $1,388,100 or $10,140 per share as of May 31, 1975, and

$1,615,000 or $11,797 per share as of April 30, 1981.     In

reconciling these differences, Mr. Kimmel, in his report, accorded a

"majority of the weight" to the income approach and "minimal weight"

to the cost approach.   In his report, Mr. Kimmel ultimately

concluded that CamVic's fair market value was $1.3 million or $9,496

per share as of May 31, 1975, and $1.8 million or $13,148 per share

as of April 30, 1981.

     For the reasons set forth below, we find that neither

petitioners nor their expert have demonstrated that the fixed price

per share as set out in the Buy-Sell Agreement reflected adequate




     28
      (...continued)
value. In his report, Mr. Kimmel stated that no comparables were
found which were reflective of the business in which CamVic and
CamRon were engaged and two businesses were found comparable to
Ferguson.
     29
      The disagreement between the parties' experts with respect
to value pursuant to the cost approach is due to their
differences over the fair market value of the underlying
corporate assets. While there are relatively small differences
over the amount of corporate liabilities, the differences with
respect to corporate liabilities would have little impact on the
value of the corporate stock.
                               - 41 -

and full consideration for the CamVic stock includable in decedent's

estate.

     First, we note that during his testimony, Mr. Kimmel himself

corrected a number of errors in his report.    For instance, Mr.

Kimmel's report listed the value of the Lakeview apartments under

the income approach--Mr. Kimmel's preferred approach--at $290,000 as

of the time of the 1981 Revised Agreement.    At trial, Mr. Kimmel

testified that he received information subsequent to submission of

his report which caused him to increase his income approach

valuation of Lakeview to $340,000.30    Mr. Kimmel's report also stated

that the income approach value of Victory Tower as of April 30,

1981, was $825,000; however, at trial, Mr. Kimmel testified that he

had relied upon "suspect" data in the original report and that he

had changed his valuation under the income approach to $840,000, the

valuation determined by respondent.     Mr. Kimmel's report applied a

liquidity discount in his cost approach valuation of CamVic and its

subsidiaries CamRon and Ferguson for both 1975 and 1981.    Mr. Kimmel

testified that this was erroneous, as the discount should have been

applied at CamVic's level only.   In his report, Mr. Kimmel valued

CamVic using the cost approach at $6,925 per share in 1975 and

$16,424 per share for 1981.   At trial, Mr. Kimmel increased his

valuations under the cost approach to $7,439 per share and $17,876

per share for 1975 and 1981, respectively.    At the trial, Mr. Kimmel

     30
      Mr. Kimmel's final estimate of value for this property was
$325,000.
                                - 42 -

concluded that his corrections had no effect on his ultimate

conclusion that the value of CamVic's stock in May 1975 and April

1981 was $1.3 million or $9,496 per share and $1.8 million or

$13,148 per share, respectively.

     Second, while Mr. Kimmel relied primarily upon the income

approach in determining the value of CamVic's stock, he failed to

provide an adequate explanation to justify his chosen expense

estimates, which serve to reduce the valuation of a property under

the income approach.   When valuing Dina Terrace and Dina Tower, Mr.

Kimmel estimated that expenses would be 55 and 47 percent of gross

income for 1975 and 1981, respectively.31   It is well established

that estimates and assumptions not supported by independent evidence

are of little assistance and will not be accepted as probative of

value.    See, e.g., Rose v. Commissioner, 88 T.C. 386, 418 (1987),

affd. 868 F.2d 851 (6th Cir. 1989); Chiu v. Commissioner, 84 T.C.

722, 730 (1985).

     Third, we note that Mr. Kimmel valued several properties below

the value determined by Hamilton County, Ohio, for purposes of the

county's property tax assessment.   The parties have stipulated that

Hamilton County computes the assessed value of real property by

multiplying the county's estimate of market value by 35 percent.

Using this formula, we have determined that Hamilton County

     31
      In contrast, the computations regarding Dina Terrace and
Dina Tower prepared by Mr. Hughes in 1975 show gross revenue of
$360,217 and operating expenses of $144,087, indicating that
expenses were only 40 percent of gross income. See supra p. 12.
                                 - 43 -

estimated Dina Terrace and Dina Tower at a combined value of

approximately $2,063,629 in 1975 and $2,721,971 in 1981.     Mr. Kimmel

valued these properties at $1.6 million and $2.5 million for 1975

and 1981, respectively.     In addition, under the above formula,

Hamilton County computed the value of the Lakeview apartments in

1981 at approximately $382,851, while Mr. Kimmel valued them at

$300,000 for the same period.     Thomas P. Dwyer, respondent's expert

witness, stated in his report that "It has been my experience that

properties in Hamilton County are valued conservatively.     Generally,

county values are less than the fair market value."     Unlike Mr.

Kimmel, Mr. Dwyer was quite familiar with the Hamilton County area.

Hamilton County's valuations reinforce the conclusion that Mr.

Kimmel undervalued properties in computing his valuation of CamVic.32

     Finally, we note the variation between Mr. Kimmel's valuation

and the valuations of CamVic's stock which occurred between 1971 and

1974.     On June 21, 1971, CamVic merged with BRGC and Bommer

Builders, Inc., and CamVic was the surviving corporation in the

merger.     The value of CamVic stock used to compute the exchange

ratio for the merger was $14,192.45 per share.     In addition, between

1972 and 1974, decedent made 12 gifts of CamVic stock to his

children and grandchildren.     Decedent valued each of these gifts at

     32
      Mr. Dwyer also stated in his report that "Very few
properties have county values higher than the actual market
value. The few properties that are overvalued are normally
appealed and subsequently revised." We note that CamVic
successfully protested Victory Tower's 1981 value, and the county
revised its assessed tax value from $300,940 to $280,000.
                                 - 44 -

$15,105.74 per share for gift tax purposes.      The original Buy-Sell

Agreement was entered into in May 1975 and set the price for CamVic

stock at $11,333.30 per share.    Neither petitioners nor their expert

gave any explanation for the approximately $4,000 (or greater than

25 percent) decline in the value of CamVic stock between 1974 and

1975.     Moreover, following our review of the record, we have also

been unable to find any reason--outside of estate tax planning--to

justify such a decline in value.

     We conclude that petitioners have not met their burden of

proving that the price per share set forth in the Buy-Sell Agreement

or the Revised Agreement reflected adequate and full consideration

for decedent's interest in CamVic stock.33      Estate of Gloeckner v.

Commissioner, T.C. Memo. 1996-148; Estate of Lauder v. Commissioner,

T.C. Memo. 1992-736.    Thus, we hold that the fixed price of

$11,333.30 price per share set forth in both agreements is not

binding for estate tax purposes.    As a result of our decision,

further proceedings will be necessary to determine the actual fair

market value of CamVic stock at the time of decedent's death on

September 10, 1990.



                                          Appropriate orders will

                                  be issued.



     33
      Even petitioners' expert determined that the value of
CamVic's stock exceeded $11,333.30 per share as of April 1981.
