                           UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


ROBERT T. GOW; KAY F. GOW,             
            Petitioners-Appellants,
                 v.                            No. 00-2119
COMMISSIONER OF INTERNAL REVENUE,
              Respondent-Appellee.
                                       
            Appeal from the United States Tax Court.
                     (Tax Ct. No. 96-25651)

                         Argued: May 9, 2001

                      Decided: September 24, 2001

       Before LUTTIG, MOTZ, and KING, Circuit Judges.



Affirmed by unpublished per curiam opinion.


                              COUNSEL

ARGUED: Craig Dennis Bell, MCGUIRE WOODS, L.L.P., Rich-
mond, Virginia, for Appellants. Rachel Ida Wollitzer, Tax Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee. ON BRIEF: James C. Roberts, MAYS & VAL-
ENTINE, Richmond, Virginia, for Appellants. Paula M. Junghans,
Acting Assistant Attorney General, Teresa E. McLaughlin, Tax Divi-
sion, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
2             GOW v. COMMISSIONER OF INTERNAL REVENUE
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                                OPINION

PER CURIAM:

   Dr. Kay F. Gow and her husband Robert T. Gow appeal the March
20, 2000 decision of the United States Tax Court, which ruled that
they jointly owed the Internal Revenue Service substantial deficien-
cies in connection with their individual returns for the tax years 1989
through 1992. The Gows contend that the Tax Court improperly val-
ued shares of stock in Williamsburg Vacations, Inc. ("WVI") which
had been awarded to Dr. Gow by WVI as bonus compensation in
1989 and 1990. Additionally, the taxpayers maintain that the Tax
Court erred in concluding that certain travel-related expenses paid by
WVI were primarily for their personal benefit and constituted con-
structive dividends paid to Dr. Gow. As we explain below, each of
these contentions is without merit, and we affirm.

                                     I.

   WVI was incorporated in July 1983 to develop a time-share resort
near Williamsburg, Virginia. The initial shareholders were Dr. Gow
and Horace Henderson, owning 650 and 350 WVI shares, respec-
tively. On September 30, 1983, Dr. Gow sold 200 of her WVI shares
to E. Corbell Jones. That same day, Dr. Gow and Jones entered into
a voting trust agreement (the "Voting Trust") concerning all of their
WVI stock shares, designating Mr. Gow as the trustee.1 The Voting
Trust was to continue for ten years until September 30, 1993, and it
was amended on October 24, 1988, to include any WVI stock Dr.
Gow had acquired or would thereafter acquire. During each of the
four tax years in issue, 1989 through 1992, Dr. Gow served as both
    1
   A voting trust is a device whereby two or more persons, owning stock
with voting powers, divorce the stock’s voting rights from its ownership,
retaining the latter in themselves and transferring the former to a trustee.
Black’s Law Dictionary 1577 (6th ed. 1990).
              GOW v. COMMISSIONER OF INTERNAL REVENUE                     3
President of WVI and as Chairman of its Board of Directors. During
this period her husband served as Secretary of WVI, as a member of
its Board, and as trustee of the Voting Trust.

   On October 19, 1983, Dr. Gow, Henderson, and Jones signed an
agreement to purchase Powhatan Plantation, on which the time-share
resort was to be built, and they then assigned their rights in Powhatan
Plantation to WVI. On November 19, 1986, in order to alleviate
financing problems related to the resort’s construction, WVI, along
with Powhatan Plantation’s construction contractor (Bush Construc-
tion Co.) and its marketing company (Offsite International), entered
into a new venture called Powhatan Associates. Powhatan Associates
assumed ownership and operation of Powhatan Plantation, and WVI
became a one-third owner of Powhatan Associates. In 1997, Powha-
tan Associates sold the Powhatan Plantation resort to Signature
Resorts, Inc. for the sum of $59.1 million.

   On February 16, 1988, the WVI Board of Directors authorized the
issuance of 10,000 shares of stock to Dr. Gow as bonus compensa-
tion, at a maximum rate of 1,000 shares per year. Thereafter, on Feb-
ruary 16, 1989, WVI issued 800 of these authorized shares of WVI
stock to Dr. Gow as bonus compensation (the "1989 stock"). The fol-
lowing year, on February 15, 1990, WVI awarded an additional 400
of these authorized shares as bonus compensation to Dr. Gow (the
"1990 stock").2 On their 1989 and 1990 jointly-filed tax returns, the
Gows reported the value of these two bonus compensation stock
awards (the "bonus compensation stock") at $40,000 and $20,000,
respectively.

  Between 1984 and 1992 the Gows made numerous visits, all paid
  2
    The Stipulation of Facts filed by the parties in the Tax Court indicates
that after Dr. Gow received the 1989 and 1990 bonus compensation stock
she owned 1,700 of 2,250 outstanding shares of WVI. J.A. 613. By our
calculations, however, she owned 1,650 of 2,200 outstanding shares of
WVI. Regardless of which figures are correct, by 1990 Dr. Gow owned
the vast majority of the shares of WVI, that is, between seventy-five and
seventy-six percent. As such, her husband, as trustee of the Voting Trust
(possessing voting rights over her shares and Jones’s 200 shares), con-
trolled WVI.
4             GOW v. COMMISSIONER OF INTERNAL REVENUE
for by WVI, to vacation resorts in Hawaii and Florida. On at least
seven occasions, the WVI Board authorized funding of these trips,
purportedly for the Gows to remain knowledgeable about innovations
in the resort industry. During these trips, the taxpayers were guests in
lavish hotels and resorts costing up to $900 per night, and records
introduced at trial indicate that they dined in restaurants charging
upwards of $2000 for a single meal.

   WVI’s corporate tax returns were audited in July 1991, and the
Gows’ jointly-filed tax returns were thereafter included in the audit.
On August 29, 1996, the Commissioner of Internal Revenue issued a
notice of deficiency to the taxpayers for the tax years 1989 through
1992. In the notice of deficiency, the Commissioner asserted that the
fair market value of the 1989 stock and the 1990 stock, upon its
acquisition, was $1,600,000 and $800,000, respectively, and that the
taxpayers had received constructive dividends from WVI for 1989,
1990, 1991, and 1992, in the sums of $305,072, $395,225, $341,521,
and $323,281, respectively.3 The Gows thereafter petitioned in the
Tax Court for a redetermination of these deficiencies. They claimed
that, first of all, the Commissioner had improperly valued the bonus
compensation stock paid to Dr. Gow in 1989 and 1990, and secondly,
that the expenses paid by WVI in connection with the taxpayers’ sev-
eral trips to Hawaii and Florida did not constitute constructive divi-
dends paid by WVI to Dr. Gow.

  Following a trial conducted in March 1999, the Tax Court made
extensive findings of fact and conclusions of law. It filed its lengthy
    3
    In total, the Commissioner asserted annual income tax deficiencies
against the taxpayers in the sums of $522,221, $334,663, $109,047, and
$103,224 for 1989, 1990, 1991, and 1992, respectively. Pursuant to
I.R.C. § 6663(a), the Commissioner assessed seventy-five percent fraud
penalties of $391,666, $250,997, $81,785, and $77,418, for the years
1989, 1990, 1991, and 1992, respectively. In the event that the fraud pen-
alties were found inapplicable, the Commissioner alternatively sought
accuracy-related penalties of twenty percent of the underpayment in
question. After reevaluation, the Commissioner increased the 1989 tax
deficiency to $877,054 and the 1991 tax deficiency to $153,214. Conse-
quently, to reflect these increases, the Commissioner assessed larger civil
fraud penalties of $657,791 and $114,911, for those years, respectively.
              GOW v. COMMISSIONER OF INTERNAL REVENUE                    5
"Memorandum Findings of Fact and Opinion," on March 20, 2000
(the "Opinion"), disposing of the dispute in a manner generally favor-
able to the Commissioner. Gow v. Commissioner, 79 T.C.M. (CCH)
1680 (2000).4 At trial, the Commissioner’s experts testified that the
fair market value of the 1989 stock was $2,142,313 and that the fair
market value of the 1990 stock was $597,353. By contrast, an expert
witness retained by the Gows valued the 1989 stock at only $685,000
and the 1990 stock at only $299,000. The Tax Court, after evaluating
the conflicting evidence before it, adopted the values proposed by the
Commissioner’s experts. However, it reduced those values by apply-
ing the higher discount rates for two factors, denominated as "lack of
control" and "marketability" of Powhatan Associates and WVI,
presented by the Gows’ expert. In its valuation of the bonus compen-
sation stock, the Tax Court considered and rejected the Gows’ conten-
tion (contrary to the evidence of their expert) that the stock had no
value whatsoever because it was subject to the Voting Trust.

   With respect to the several Florida and Hawaii trips, and the
expenses incurred incident thereto, the Tax Court determined that
their primary purpose was the personal enjoyment of the taxpayers,
not the economic benefit of WVI. It found that the expenses attribut-
able to those trips, totalling over $1.3 million, constituted constructive
dividends paid by WVI to Dr. Gow, and it concluded that they were
taxable to the Gows in the years of their receipt, that is, 1989, 1990,
1991, and 1992. The court found yearly income tax deficiencies of
$410,796 in 1989, $196,961 in 1990, $102,441 in 1991, and $82,949
in 1992. Additionally, the court found that the Gows owed accuracy-
related penalties under I.R.C. § 6662(a) for the years 1989, 1990,
  4
   The Tax Court did not accept the Commissioner’s position in its
entirety. In addition to rejecting some of the valuation testimony of the
Commissioner’s experts, the Tax Court also declined to assess the tax-
payers the very substantial civil fraud penalties sought by the Commis-
sioner. In denying the civil fraud penalties, the court recognized that the
fraud issue was close, finding that the Gows’ "conduct in this case comes
close to the line that separates a conscious ‘disregard of rules or regula-
tions’ from an ‘intent to evade taxes believed to be owing.’" Gow, 79
T.C.M. at 1695. The Commissioner has not appealed the denial of civil
fraud penalties.
6             GOW v. COMMISSIONER OF INTERNAL REVENUE
1991, and 1992 in the sums of $82,159.20, $39,392.00, $20,488.20,
and $16,589.80, respectively.5

   On appeal, the Gows make three basic contentions. First, they
maintain that the Tax Court should have valued the 1989 stock and
the 1990 stock at zero. Second, they contend that the court’s method-
ology for determining the fair market values of the bonus compensa-
tion stock was clearly erroneous. Third, they insist that the travel
expenditures paid by WVI for their various trips to Hawaii and Flor-
ida were not for their personal benefit, and therefore are not taxable
to them as constructive dividends paid to Dr. Gow. We possess juris-
diction pursuant to 26 U.S.C. § 7482(a)(1).

                                   II.

   We review de novo the Tax Court’s conclusions on questions of
law. Waterman v. Commissioner, 179 F.3d 123, 126 (4th Cir. 1999).
The Tax Court’s findings of fact, however, may be set aside only if
they are clearly erroneous, and factual determinations are clearly erro-
neous only if "on the entire evidence the reviewing court is left with
the definite and firm conviction that a mistake has been made." Zfass
v. Commissioner, 118 F.3d 184, 188 (4th Cir. 1997) (quoting Faul-
coner v. Commissioner, 748 F.2d 890, 895 (4th Cir. 1984)). As such,
determinations of fair market value made by the Tax Court after trial
constitute findings of fact, subject to our review only for clear error.
Burbage v. Commissioner, 774 F.2d 644, 646 (4th Cir. 1986).

                                  III.

                                   A.

   The trier of fact normally places a fair market value on corporate
stock by simply examining its market price. In closely-held corpora-
tions, however, there are often no arm’s-length sales of corporate
stock on which to base a determination of fair market value. In these
instances, the fair market value of such stock is determined by utiliz-
    5
    As we observed, the Tax Court declined to impose the civil fraud pen-
alties sought by the Commissioner under I.R.C. § 6663(a).
              GOW v. COMMISSIONER OF INTERNAL REVENUE                 7
ing the well-accepted hypothetical willing buyer-willing seller con-
cept. "The willing buyer-willing seller test of fair market value is
nearly as old as the federal income, estate, and gift taxes themselves."
United States v. Cartwright, 411 U.S. 546, 551 (1973). As the
Supreme Court has explained, fair market value is "the price at which
the property would change hands between a willing buyer and a will-
ing seller, neither being under any compulsion to buy or to sell and
both having reasonable knowledge of relevant facts." Id. (quoting
Treas. Reg. § 20-2031-1(b) (1958)). In conducting the valuation
inquiry, the trier of fact must look to the "existing facts, circum-
stances, and factors at the valuation date that influence a hypothetical
willing buyer and willing seller in determining a selling price." Estate
of Newhouse v. Commissioner, 94 T.C. 193, 231 (1990).

   In this instance, application of the hypothetical willing buyer-
willing seller test was appropriately employed by the Tax Court. As
reflected in its Opinion, the court looked to the acquisition dates in
1989 and 1990, i.e., when the WVI shares were delivered as bonus
compensation to Dr. Gow, and it imagined that the corporation
instead had sold those shares to some hypothetical third party. The
price that the hypothetical third party would have paid for the stock
on February 16, 1989, and February 15, 1990, was used to determine
its fair market value. See Gow, 79 T.C.M. at 1685-86 (citing United
States v. Cartwright, 411 U.S. 546 (1973)).

   The Gows contend that the Tax Court committed clear error in fail-
ing to conclude that the Voting Trust rendered all the bonus compen-
sation stock valueless. Specifically, they assert that, because the WVI
shares awarded to Dr. Gow as bonus compensation in 1989 and 1990
were thereafter subject to the Voting Trust, Dr. Gow could not vote
them in the affairs of WVI and thus they were of no value.6 The Gows
seek to buttress this contention by making an analogy to the restric-
tions imposed by Securities and Exchange Commission Rule 144,
which requires the holder of certain securities to have held them for
at least two years before being able to sell them. In Estate of Gilford
  6
   Notably, the Gows’ own testifying expert witness rejected this asser-
tion, and he concluded that the shares should not be valued at zero. As
we have noted, he valued the 1989 stock at $685,000 and the 1990 stock
at $299,000.
8             GOW v. COMMISSIONER OF INTERNAL REVENUE
v. Commissioner, 88 T.C. 38, 58-59 (1987), the Tax Court concluded
that in valuing stock, the restrictions imposed by Securities and
Exchange Commission Rule 144 should be taken into consideration.
By extension, the taxpayers assert that in valuing the bonus compen-
sation stock the Tax Court should have considered the restrictions
imposed on the stock by the Voting Trust, and it should have con-
cluded that all of Dr. Gow’s WVI stock was valueless.

   We have carefully considered the Gows’ contention in this respect,
both as made in their briefs and as presented at oral argument, and we
see it as meritless. A hypothetical buyer would not have purchased the
bonus compensation stock from the corporation subject to the Voting
Trust. The willing buyer is a purely hypothetical purchaser who does
not reflect the personal characteristics of the actual recipients of the
stock. See Estate of Watts v. Commissioner, 823 F.2d 483, 486 (11th
Cir. 1987) ("[T]he Commissioner is correct in arguing that the actual
subjective intention of the [parties] . . . is irrelevant."); Estate of
Bright v. United States, 658 F.2d 999, 1006 (5th Cir. 1981) ("[T]he
‘willing seller’ is not the estate itself, but is a hypothetical seller.");
Kolom v. Commissioner, 644 F.2d 1282, 1288 (9th Cir. 1981) (agree-
ing with the Tax Court that "the willing buyer/willing seller test does
not refer to Kolom’s own unwillingness to sell [the stock] under the
particular circumstances of his case."). The Voting Trust simply con-
stituted a private agreement between stockholders of WVI and the
trustee. See supra note 1. Stock shares of a corporation are not
encumbered or diminished in value simply because some of its share-
holders, after acquisition, have placed their shares into a voting trust.
In short, this Voting Trust was personal to Dr. Gow, and the restric-
tions imposed by it would not attach to any hypothetical purchaser.

   The foregoing analysis also serves to defeat the Gows’ analogy to
Securities and Exchange Commission Rule 144, or for that matter to
any other federal securities statute or regulation. Any restrictions
imposed by federal securities statutes or regulations are binding on
both the actual purchaser (here, Dr. Gow) and also on any other pur-
chaser (i.e., the hypothetical buyer). Restrictions imposed by voting
trusts, however, bind only the parties to the voting trust (here, Dr.
Gow). Voting trust restrictions therefore have no impact on a hypo-
thetical purchaser who is not a party to the voting trust agreement.
Thus, any hypothetical purchaser would have purchased the 1989 and
              GOW v. COMMISSIONER OF INTERNAL REVENUE                 9
1990 bonus compensation stock free of the Voting Trust, and would
have paid fair market value for those stock shares. As such, the Tax
Court’s determination that the bonus compensation stock received by
Dr. Gow in 1989 and 1990 possessed the fair market values placed
on it, as of the dates on which she acquired it, was not clearly errone-
ous.

                                  B.

                                   1.

   It is apparent from the record that the Tax Court undertook an
extensive and careful analysis in order to fairly value the bonus com-
pensation stock. After carefully considering the testimony of the tax-
payers’ expert and that of two of the Commissioner’s experts, the
court accepted the opinions of the Commissioner’s experts on most
— but not all — of its valuation decisions. The court carefully
explained that, for multiple reasons, the Commissioner’s valuation
methodology was more persuasive. It observed that the Gows’ expert
had improperly reduced the value of the two companies, Powhatan
Associates and WVI, by (1) understating the income stream of Pow-
hatan Associates, (2) applying an excessive thirty-two percent dis-
count rate to Powhatan Associates’ estimated cash-flow stream, and
(3) using an excessive fifteen percent contingency discount that fur-
ther reduced the adjusted book value of WVI. Nevertheless, the court
adopted the higher discount rates presented by the Gows’ testifying
expert for the factors of lack of control and marketability.

                                   2.

   The Gows raise seven specific challenges to the Tax Court’s valua-
tion methodology. They direct five of these objections to the Tax
Court’s methodology in valuing Powhatan Associates, and they make
two challenges to the court’s methodology in valuing WVI.

   First, the Gows assert that the Tax Court erred in projecting that
Powhatan Associates would sell 1800 and 1900 time-share intervals
in 1989 and 1990, respectively. They contend that these projections
were an unreasonable increase in the rate of such sales compared to
10            GOW v. COMMISSIONER OF INTERNAL REVENUE
past years. Second, and closely related to the first contention, the tax-
payers maintain that the court overstated Powhatan Associates’ total
value by projecting sales revenue based on an excessive asking price
for the time-share intervals. Third, the Gows assign error to the Tax
Court’s failure to consider administrative, general, and sales costs in
valuing Powhatan Associates’ profits. Fourth, the taxpayers contend
that the Tax Court’s application of a twenty-five percent discount rate
to the net value of Powhatan Associates was too low, because it
accounted for only the property Powhatan Associates owned and did
not account for the accompanying business itself. Fifth, the Gows
assert that even though Powhatan Associates is a non-taxable entity,
WVI’s stake in Powhatan Associates is taxable. As such, they contend
that the value of Powhatan Associates should have been discounted
to reflect the state and federal taxes WVI incurs.

   The taxpayers make two challenges to the court’s valuation of
WVI. They contend, first of all, that the Tax Court overvalued WVI’s
assets by failing to discount the value of a $192,330 promissory note
that had been outstanding for over five years, maintaining that WVI
was likely to recover only a fraction of its face value. Additionally,
the taxpayers maintain that the value of WVI’s assets should have
been further discounted because of the risk of dissolution arising from
a lawsuit filed by one of WVI’s original shareholders.

   As we have observed, the Tax Court’s valuation determinations
constitute findings of fact, see Burbage, 774 F.2d at 646, which we
may set aside only if clearly erroneous. See Zfass, 118 F.3d at 188.
The various challenges to the Tax Court’s valuation methodology are
based either on the court’s determination to use one valuation theory
instead of another, or on its finding that certain facts should be given
more consideration than others. Our review of these valuation deci-
sions is controlled by the principle that "[w]here there are two permis-
sible views of the evidence, the factfinder’s choice between them
cannot be clearly erroneous." Id. (quoting Hendricks v. Commis-
sioner, 32 F.3d 94, 97 (4th Cir. 1994)). We have made a careful and
thorough review of the Tax Court’s decision in this regard, and we are
not "left with the definite and firm conviction that a mistake has been
made." Id. We are therefore satisfied that the Tax Court’s valuation
findings with respect to Powhatan Associates and WVI were not
clearly erroneous.
              GOW v. COMMISSIONER OF INTERNAL REVENUE                 11
                                   C.
   Finally, the taxpayers contend that the Tax Court erred in deciding
that the travel-related expenses for their trips to Hawaii and Florida
in the relevant years, totalling over $1.3 million, were primarily for
their personal benefit and constituted constructive dividends paid to
Dr. Gow by WVI. The applicable principle of law on this point is not
disputed: when a corporation makes an expenditure primarily to con-
fer a substantial personal benefit on a shareholder, the value of the
benefit conferred is taxable as a constructive dividend. Mills v. Com-
missioner, 840 F.2d 229, 235 (4th Cir. 1988) (explaining that "if the
primary purpose of the transfer was to benefit the individual stock-
holder and the transfer had that effect" it is taxable constructive divi-
dend); Hash v. Commissioner, 273 F.2d 248, 250 (4th Cir. 1959)
(noting that cancellation of shareholder debt to corporation constitutes
taxable constructive dividend). The question of whether WVI’s pay-
ment of the challenged travel expenses were constructive dividends
paid by WVI to Dr. Gow is also of a factual nature, and the Tax
Court’s finding in that regard may be set aside only if it is clearly
erroneous. See Zfass, 118 F.3d at 188.
   There was ample evidence presented at trial in support of the Tax
Court’s determination that the Gows’ travel expenses constituted con-
structive dividends. WVI funded, in their entirety, the Gows’ many
lavish trips to resorts in Hawaii and Florida. Indeed, each of these
excursions was taken around the Thanksgiving, Christmas, or New
Year’s holidays. While the Gows contend that these trips were for
research purposes, they made no written reports of their research.
Moreover, they offered no convincing explanation of why or how
WVI, as part owner of a resort in Williamsburg, Virginia, might bene-
fit from their "research" at resorts thousands of miles away. In these
circumstances, we are unable to see the Tax Court’s findings on the
issue of the Gows’ vacation trips as clearly erroneous.

                                  IV.
   Pursuant to the foregoing, we find no error in the Tax Court’s deci-
sion. We are therefore content to adopt its well-reasoned Opinion, and
we affirm. Gow v. Commissioner, 79 T.C.M. (CCH) 1680 (2000).
                                                            AFFIRMED
