
157 F.Supp. 757 (1957)
Joseph Burr BARTRAM, Mary Sheppard Bartram, Eleanor Bartram Radley, and Eleanor Bartram Radley and Joseph Burr Bartram as Executors of John J. Radley, Jr., Plaintiffs,
v.
Helen B. GRAHAM, as Administratrix, et al., Defendants.
Civ. A. Nos. 5955-5958.
United States District Court D. Connecticut.
September 30, 1957.
Cummings & Lockwood, Stamford, Conn. (Morgan P. Ames and Francis P. Schiaroli, Stamford, Conn., of counsel), for plaintiffs.
Jerome Fink, Tax Division, Dept. of Justice, Washington, D. C., Simon S. Cohen, U. S. Atty., Henry C. Stone, Asst. U. S. Atty., Hartford, Conn., for defendants.
J. JOSEPH SMITH, Chief Judge.

Finding of Facts
1. These are civil actions which arise under the laws of the United States of America providing for internal revenue in that they seek the recovery of monies representing gift taxes assessed and collected by the former District Director of Internal Revenue for the District of Connecticut, who is represented herein by the defendants, Helen B. Graham, his administratrix, and Harold All, District Director of Internal Revenue for the District of Connecticut.
2. The plaintiff in Civil Action No. 5955 is Joseph Burr Bartram, a resident of the Town of Greenwich, County of Fairfield and State of Connecticut.
3. On or about December 26, 1950, said Joseph Burr Bartram transferred gifts of 370 shares of common stock, no par value, of Bartram Brothers Corporation to trusts for the benefit of each of his children, Nina Bartram Griswold and Joseph Burr Bartram, Jr.
4. On or about March 13, 1951 said Joseph Burr Bartram filed United States Gift Tax Return, Form 709, for the calendar year 1950, reporting said gifts of *758 Bartram Brothers Corporation stock therein at a value of $114.128 per share.
5. Said Joseph Burr Bartram's wife, Mary Sheppard Bartram, consented to and did report one-half of the said gifts of stock on her individual gift tax return for the year 1950.
6. Said Joseph Burr Bartram and said Mary Sheppard Bartram each reported transfers totaling $42,227.36 based on the valuation of Bartram Brothers stock at $114.128 per share.
7. At the request of the then District Director of Internal Revenue, James J. Graham, said Joseph Burr Bartram executed and filed a waiver of restrictions on the assessment and collection of additional gift tax in the principal amount of $4,746.93.
8. On or about April 29, 1954, said Joseph Burr Bartram paid additional gift tax in the principal amount of $4,746.93 together with interest thereon in the amount of $862.99.
9. On or about July 20, 1954, said Joseph Burr Bartram filed a timely Claim for Refund on Treasury Form 843 with the said District Director of Internal Revenue, claiming gift tax erroneously and illegally assessed and paid in the sum of $5,609.92.
10. The said District Director of Internal Revenue did not render any decision on the Claim for Refund before the expiration of six months from the date of filing such claim.
11. The plaintiff in Civil Action No. 5956 is said Mary Sheppard Bartram, a resident of the Town of Greenwich, County of Fairfield and State of Connecticut.
12. At the request of the said District Director of Internal Revenue, said Mary Sheppard Bartram executed and filed a waiver of restrictions on the assessment and collection of additional gift tax in the principal amount of $1,959.41.
13. On or about April 29, 1954, Mary Sheppard Bartram paid additional gift tax in the principal amount of $1,959.41 together with interest thereon in the amount of $356.22.
14. On or about July 20, 1954, said Mary Sheppard Bartram filed a timely Claim for Refund on Treasury Form 843 with the said District Director of Internal Revenue claiming gift tax erroneously and illegally assessed and paid in the sum of $2,315.63.
15. The said District Director of Internal Revenue did not render any decision on the Claim for Refund before the expiration of six months from the date of filing such claim.
16. The plaintiff in Civil Action No. 5957 is Eleanor Bartram Radley, a resident of the Town of Greenwich, County of Fairfield and State of Connecticut.
17. On or about December 26, 1950, said Eleanor Bartram Radley transferred gifts of 500 shares of common stock, no par value, of Bartram Brothers Corporation to trusts for the benefit of each of her children, Harriet Windsor, Eleanor Bartram Radley and Edith Marguerite Radley.
18. On or about March 13, 1951 said Eleanor Bartram Radley filed United States Gift Tax Return, Form 709, for the calendar year 1950, reporting said gifts of Bartram Brothers Corporation stock therein at a value of $114.128 per share.
19. Said Eleanor Bartram Radley's husband, John J. Radley, Jr., consented to and did report one-half of the said gifts of stock on his individual gift tax return for the year 1950.
20. Said Eleanor Bartram Radley and said John J. Radley, Jr. each reported transfers totaling $114,128.00 based on the valuation of Bartram Brothers stock at $114.128 per share.
21. At the request of the said District Director of Internal Revenue, said Eleanor Bartram Radley executed and filed a waiver of restrictions on the assessment and collection of additional gift tax in the principal amount of $11,005.20.
22. On or about April 29, 1954, said Eleanor Bartram Radley paid additional gift tax in the principal amount of $11,005.20 together with interest thereon in the amount of $2,000.75.
*759 23. On or about July 20, 1954, said Eleanor Bartram Radley filed a timely Claim for Refund on Treasury Form 843 with the said District Director of Internal Revenue, claiming gift tax erroneously and illegally assessed and paid in the sum of $13,005.95.
24. The said District Director of Internal Revenue did not render any decision on the Claim for Refund before the expiration of six months from the date of filing such claim.
25. The plaintiffs in Civil Action No. 5958 are Eleanor Bartram Radley and Joseph Burr Bartram as Executors of said John J. Radley, Jr., who died after the commencement of this action. Prior to his death, John J. Radley, Jr. was a resident of the Town of Greenwich, County of Fairfield and State of Connecticut.
26. At the request of the said District Director of Internal Revenue, said John J. Radley, Jr. executed and filed a waiver of restrictions on the assessment and collection of additional gift tax in the principal amount of $10,677.12.
27. On or about April 29, 1954, said John J. Radley, Jr. paid additional gift tax in the principal amount of $10,677.12 together with interest thereon in the amount of $1,941.19.
28. On or about July 20, 1954, said John J. Radley, Jr. filed a timely Claim for Refund on Treasury Form 843 with the said District Director of Internal Revenue, claiming gift tax erroneously and illegally assessed and paid in the sum of $12,618.31.
29. The said District Director of Internal Revenue did not render any decision on the Claim for Refund before the expiration of six months from the date of filing of such claim.
30. Bartram Brothers Corporation (hereinafter referred to as the corporation) is a corporation organized in 1925 under the laws of the State of Delaware, having its place of business in the City, County and State of New York.
31. On December 26, 1950, the corporation had issued and outstanding a total of 1,370 shares of preferred stock, $100 par value, and 148,235 shares of common stock, no par value. The fair market value of its total assets as of that date was $24,788,341. The book value of its assets as of that date was $21,051,260.
32. The corporation's business has at all times consisted entirely of the investment and management of its security portfolio.
33. At all times in question the corporation was a personal holding company and not a regulated investment company under the revenue laws of the United States.
34. The corporation's stock has never been listed or traded on any recognized securities exchange.
35. Almost all of the shares of stock outstanding have been owned and held at all times by the Bartram family including descendants, relatives and spouses or by irrevocable trusts for the benefit of various family members.
36. The Bartram family control the corporation, and the corporation's directors and officers are chosen primarily from the Bartram family.
37. There have been only approximately twenty-five sales or exchanges of the stock in the thirty-two years of the corporation's existence. All such sales were of small amounts and to or from employees or their estates.
38. As of December 26, 1950 there was no apparent prospect of the corporation's being liquidated in the foreseeable future.


*760
39.
                     Bartram Brothers Corporation
                         List of Stockholders
                          December 26, 1950
                                                    Preferred     Common
The New York Trust Company, substitute trustee
    for Howard P. Bartram                             1,370
Estate of Joseph Percy Bartram                                    7,200
John J. Radley, Jr. and J. Burr Bartram, trustees
    u/deed of Eleanor F. Bartram dated June 26,
    1912 for J. Burr Bartram, et al                               5,904
Rensselaer W. Bartram                                            19,650
Rensselaer W. Bartram and Rensselaer W. Bartram,
    Jr., trustees for Florence M. Booth                             500
Rensselaer W. Bartram and Rensselaer W. Bartram,
    Jr., trustees for Jane Bartram Weed                           3,880
Rensselaer W. Bartram and Jane Bartram Weed,
    trustees for Rensselaer W. Bartram, Jr.                       3,880
Rensselaer W. Bartram and Rensselaer W. Bartram,
    Jr., trustees for Alice Booth Bartram                        12,000
Joseph Burr Bartram, John J. Radley, Jr. and
    Rensselaer W. Bartram, Jr., trustees for Mary
    Sheppard Bartram                                                140
Joseph Burr Bartram, John J. Radley, Jr. and
    Rensselaer W. Bartram, Jr., trustees for
    Nina Helen Bartram                                              500
Joseph Burr Bartram, John J. Radley, Jr. and
    Rensselaer W. Bartram, Jr., trustees for Joseph
    Burr Bartram, Jr.                                               500
The Bridgeport Trust Company and Carl Foster,
    trustees                                                      4,800
King & Company                                                      950
The Chase National Bank and Paul Fuller, Jr.
    trustees for Rensselaer W. Bartram                           10,000
Kane & Company                                                   10,000
Harriet R. Fischlein                                              3,200
Arthur W. Fox                                                     3,911
Arthur W. Fox, trustee                                              150
William Edward Fox                                                  100
Jennie E. Fox                                                     4,161
G. William Fox                                                    4,162
Sigler & Company                                                  6,000
Eleanor Bartram Radley                                            8,000
Joseph Burr Bartram                                               9,260
Charlotte Pudney Hall                                               520
Hazel J. Phair                                                      200
Harvey F. Phair                                                     460
Henry F. Hart                                                       365
Henry F. Hart, Laura R. Hart and Rupert T.
    Zickl, trustees U/I December 31, 1940                           500
William Kent Pudney                                                 520



*761
                                                    Preferred     Common
Eleanor B. Radley, J. Burr Bartram and John J.
    Radley, Jr., trustees for Harriet Windsor                     600
Eleanor B. Radley, J. Burr Bartram and John J.
    Radley, Jr., trustees for Eleanor Bartram
    Windsor                                                       600
Eleanor B. Radley, J. Burr Bartram and John J.
    Radley, Jr., trustees for Elizabeth Bartram
    Radley                                                        600
Eleanor B. Radley, J. Burr Bartram and John J.
    Radley, Jr., trustees for Edith Marguerite
    Radley                                                        600
Floy T. Sheldon                                                   160
Margaret Sheridan                                                 500
George E. Warren and Joseph Burr Bartram, trustees
    for Eleanor Bartram Radley                                  5,912
George E. Warren and Joseph Burr Bartram,
    trustees for Winifred D. Douglas                              800
George E. Warren, J. Burr Bartram and Chase
    National Bank, trustees for J. Burr Bartram,
    et al                                                       3,275
George E. Warren, J. Burr Bartram and Chase
    National Bank, trustees for Eleanor B. Radley,
    et al                                                       3,275
George E. Warren, Rensselaer W. Bartram, Jr.
    and Chase National Bank, trustees for Rensselaer
    W. Bartram, Jr., et al                                      5,000
George E. Warren, Rensselaer W. Bartram, Jr.
    and Chase National Bank, trustees for Jane
    Bartram Weed, et al                                         5,000
Rupert T. Zickl                                                   500
                                                      -----   -------
                                                      1,370   148,235
                                                      =====   =======



*762
Findings No. 40
                                                    Bartram Brothers Corporation
                                     Comparative Balance Sheetsat December 31, 1943-1950
                                                  Book Values vs. Market Values
                               December 31, 1943          December 31, 1944         December 31, 1945         December 31, 1946
                           ________________________    ______________________    ________________________  ________________________
                             Book           Market        Book         Market         Book          Market      Book          Market
                             Value           Value        Value         Value         Value          Value      Value          Value
                            ______          _______      _______      _______       _______        _______     _______       ________
    Assets                        $            $             $            $              $             $            $            $
Cash                            5,751        5,751         6,732        6,732         15,162        15,162       49,599       49,599
Accounts Receivable           193,872      193,872       186,518      186,518            653           653          548          548
Investments:
  Taxable Bonds               518,230      480,750       723,556      681,672      1,120,460     1,140,056      259,760      204,950
  Partially Exempt Bonds    2,428,658    2,459,177     2,404,456    2,459,465      1,782,552     1,864,625    1,330,675    1,377,750
  Wholly Exempt Bonds         446,230      447,287       443,849      457,488        557,656       590,038      552,780      564,945
  Accrued Interest
    Thereon                    25,867       25,867        21,221       21,221         13,948        13,948        8,577        8,577
  Stocks                   11,118,488   11,258,619    11,328,101   12,749,656     13,153,055    16,285,983   14,686,175   16,764,758
Insurance Investment        1,012,778    1,012,778     1,009,444    1,009,444      1,006,111     1,006,111    1,002,778    1,002,778
                           __________   __________    __________   __________     __________    __________   __________   __________
Total Assets               15,749,874   15,884,101    16,123,877   17,572,196     17,649,597    20,916,576   17,890,892   19,973,905
    Liabilities
Accounts Payable                  138          138         2,146        2,146        53,100         53,100      265,753      265,753
Reserve for Taxes              62,932       62,932       141,751      141,751       432,939        432,939      147,894      147,894
Capital Stock:
  Preferred [par $100]        137,000      137,000       137,000      137,000       137,000        137,000      137,000      137,000
  Common [no par]          15,483,016   15,483,016    15,483,016   15,483,016    15,483,016     15,483,016   15,483,016   15,483,016
  LessTreasury
    Stock                     [91,720     [92,720]      [92,720]     [92,720]     [94,720]        [94,720]    [106,666]    [106,666]
Surplus                       158,508      292,735       452,684    1,901,003    1,638,262       4,905,242    1,963,895    4,046,908
                           __________   __________    __________   __________   __________      __________   __________   __________
     Total Liabilities     15,749,874   15,884,101    16,123,877   17,572,196   17,649,597      20,916,576   17,890,892   19,973,905
                           ==========   ===========   ==========   ==========   ==========      ==========   ==========   ==========
Number of Common Shares Outstanding
   LessTreasury Stock                     148,510                   148,500                       148,480                   148,380



*763
                                    December 31, 1947            December 31, 1948          December 31, 1949          December 31, 1950
                                   Book         Market           Book        Market          Book      Market         Book        Market
                                  Value         Value            Value       Value           Value      Value         Value       Value
                                    $             $                $           $              $           $             $           $
       Assets
Cash                             225,071       225,071          247,372     247,372        105,204     105,204       135,097     135,097
Accounts Receivable                1,579         1,579              371         371            505         505        76,325      76,325
Investments:
    Taxable Bonds              1,192,313     1,089,656        1,189,626   1,083,266        923,475     889,012     1,076,844   1,070,981
    Partially Exempt
      Bonds                      934,376       905,100          927,080     920,850        919,785     958,912       912,490     947,888
    Wholly Exempt Bonds          549,064       512,969          548,333     540,530        546,691     545,550       545,050     578,981
    Accrued Interest
      Thereon                     10,968        10,968           10,854      10,854          8,568       8,568         9,693       9,693
    Stocks                    16,381,648    16,971,380       17,145,249  16,719,533     18,086,448  18,961,097    18,915,333  21,969,376
Insurance Investment              -             -                  -          -              -          -               -          -
                              ___________   __________       __________  __________     __________  __________    __________  __________
      Total Assets            19,295,019    19,716,723       20,068,886  19,522,776     20,590,676  21,468,848    21,670,832  24,788,341
                              ===========   ==========       ==========  ==========     ==========  ==========    ==========  ==========
    Liabilities
Accounts Payable                 186,238       186,238          401,165     401,165        214,316     214,316       163,966     163,966
Reserve for Taxes                514,969       514,969          250,499     250,499        235,987     235,987       318,606     318,606
Capital Stock:
    Preferred [$100 par]         137,000       137,000          137,000     137,000        137,000     137,000       137,000     137,000
    Common [no par]           15,483,016    15,483,016       15,483,016  15,483,016     15,483,016  15,483,016    15,483,016  15,483,016
    LessTreasury
      Stock                    [106,666]     [106,666]        [120,546]   [120,546]      [122,139]   [122,139]      [123,139]   [123,139]
Surplus                        3,080,462     3,502,166        3,917,752   3,371,642      4,642,496   5,520,668     5,691,383   8,808,892
                             ___________    ___________      __________  ___________   ___________  __________   ___________  __________
    Total Liabilities         19,295,019    19,716,723       20,068,886  19,522,776     20,590,676  21,468,848    21,670,832  24,788,341
                             ===========    ===========      ==========  ===========   ===========  ==========   ===========  ==========
Number of Common Shares Outstanding
    LessTreasury Stock                  148,380                      148,260                    148,245                   148,235



*764
                                                      Bartram Brothers Corporation
                                                  Comparative Statement of Profit and Loss
Finding No. 41                                  for the Years Ended December 31, 1943-1950
                                                  1943                 1944                 1945                 1946
Interest Income:                                     $                     $                    $                   $
    Taxable Bonds                                      19,819               13,872                 16,332               28,801
    Partially Tax-Exempt Bonds              70,354              65,700               49,364                 37,638
    LessAmortization of Premiums           25,395     44,959   24,202      41,498   15,775        33,589   11,320      26,318
                                            ______             ______               ______                 ______
    Wholly Tax-Exempt Bonds                 5,438              12,613               13,354                 15,580
    LessAmortization of Premiums             847       4,591   2,381       10,232   2,499        10,856    2,851       12,729
                                            ______             ______               ______                 ______
Dividends:                                            594,102              580,725               611,962               644,544
    Net Profit on Security
     Transactions                                      68,976              446,687             1,606,556               435,643
    Income from Insurance Investment                   33,522               33,507                33,532                33,537
    Miscellaneous Interest [Federal
     tax refunds]                                        -                   3,841                    -                   -
    Other Interest                                       -                     -                      -                   -
                                                      _______            _________              _________            _________
          Total Income                                765,969            1,130,361              2,312,827            1,181,571



*765
Expenses:
   Salaries of Officers                               59,000                   59,000                  59,500                 68,000
   Office Salaries                                     1,225                    1,750                   2,115                  2,470
   Legal and Technical Services                        5,100                    5,100                  13,132                 11,100
   Expense of Officers                                10,924                   11,660                  11,276                 11,588
   Directors Fees                                        440                      580                     540                    600
   Collection Expenses                                   862                      789                    -                      -
   Miscellaneous Taxes, etc.                          12,722                   17,392                  14,236                  7,320
   Interest Paid                                       2,812                    2,703                     767                  5,313
   Amortization of Irrevocable Portion
    of Insurance Investment                            3,333                    3,333                   3,333                  3,333
                                                     -------                ---------               ---------              ---------
         Total Expenses                               96,418                  102,308                 104,900                109,724
                                                     -------                ---------               ---------              ---------
                                                     669,551                1,028,054               2,207,928              1,071,847
Deduct:
   Provision for Federal Income
    Taxes                                   59,382               131,967                 420,194                 144,394
   LessRefund of Federal Income
    Taxes Relating to Prior Years           13,486    45,896         321      131,646       -         420,194       -        144,394
                                           -------   -------     -------      -------    -------    ---------    -------   ---------
                                                     623,655                  896,408               1,787,734                927,452
Deduct:
    Amortization of Bond Premiums
     for the Year Ended December
     31, 1942                                         21,501
                                                     -------                ---------               ---------              ---------
Net Profit                                           602,155                  896,408               1,787,734                927,452
                                                     =======                =========               =========              =========



*766
                                                 1947                         1948                      1949                     1950
--------------------------------   ----------------------------     ----------------------    -----------------------    ---------------------
Interest Income:                                  $                            $                         $                        $
    Taxable Bonds                                        15,054                     32,750                     37,722                   28,690
    Partially Tax-Exempt Bonds     24,067                           23,092                    23,108                     23,100
    LessAmortization of
     Premiums                       7,516                16,551      7,295          15,797     7,295           15,813     7,295         15,805
                                   ------                           ------                    ------                     ------
    Wholly Tax-Exempt Bonds        13,876                           16,561                    16,588                     16,588
    LessAmortization of
     Premiums                       2,510                11,366      1,641          14,920     1,642           14,946     1,642         14,946
                                   ------                           ------                    ------                     ------
Dividends:                                              847,958                    996,955                  1,056,579                1,277,353
    Net Profit on Security
     Transactions                                     1,416,040                    824,506                    742,671                1,052,416
    Income from Insurance Investment                     33,417                      -                          -                        -
    Miscellaneous Interest [Federal
    Other Interest                                          -                        -                          -                        -
     tax refunds]                                           -                        -                          -                          885
                                                      ---------                  ---------                  ---------                ---------
         Total Income                                 2,340,386                  1,884,928                  1,867,731                2,390,095



*767
Expenses:
   Salaries of Officers                         68,000                 68,250                70,583                 71,616
   Office Salaries                               2,794                  4,316                 5,859                 10,776
   Legal and Technical Services                 11,123                 16,039                11,115                 11,609
   Expense of Officers                          13,036                 13,798                13,874                 15,570
   Directors Fees                                  560                  2,000                 3,000                  3,100
   Collection Expenses                            -                       -                     -                      -
   Miscellaneous Taxes, Etc.                    11,628                 15,588                16,544                 17,782
   Interest Paid                                 8,241                  9,449                 7,149                  3,629
   Amortization of Irrevocable Portion
    of Insurance Investment                      2,778                    -                     -                     -
                                             ---------              ---------             ---------              ---------
         Total Expenses                        118,160                129,440               128,124                134,082
                                             ---------              ---------             ---------              ---------
                                             2,222,226              1,755,488             1,739,607              2,256,013
Deduct:
   Provision for Federal              -
    Income Taxes                   503,919                  242,568              228,357                310,518
   Less  Refund of Federal
    Income Taxes Relating to
    Prior Years                       -       503,919                 242,568       -       228,357       1,056    309,462
                                   -------  ---------       ------- ---------    -------  ---------     -------  ---------
                                            1,718,307               1,512,920             1,511,250              1,946,551
Deduct:
   Amortization of Bond Premiums
    for the Year Ended December
    31, 1942                                    -
                                            ---------               ---------             ---------              ---------
Net Profit                                  1,718,307               1,512,920             1,511,250              1,946,551
                                            =========               =========             =========              =========



*768
Finding No. 42                                  Bartram Brothers Corporation
                                              Comparative Statement of Surplus
                                         For the Years Ended December 31, 1943-1950
                             1943           1944          1945         1946          1947        1948          1949         1950
                               $              $             $            $            $            $            $            $
Balance at January 1        158,626        158,508       452,684     1,638,263    1,963,896    3,080,462    3,917,752    4,642,496
Profit for the year
after providing for
taxes                       602,154        896,408     1,787,734       927,453    1,718,306    1,512,920    1,511,250    1,946,551
                            -------      ---------     ---------     ---------    ---------    ---------    ---------    ---------
                            760,780      1,054,916     2,240,418     2,565,716    3,682,202    4,593,382    5,429,002    6,589,047
                            -------      ---------     ---------     ---------    ---------    ---------    ---------    ---------
Dividends Paid:
   Preferred6%         8,220          8,220         8,220         8,220        8,220        8,220        8,220        8,220
   Common                   594,052        594,012       593,935       593,600      593,520      667,410      778,286      889,445
                            -------      ---------     ---------     ---------    ---------    ---------    ---------    ---------
Balance at                  602,272        602,232       602,155       601,820      601,740      675,630      786,506      897,665
                            -------      ---------     ---------     ---------    ---------    ---------    ---------    ---------
 December 31                158,508        452,684     1,638,263     1,963,896    3,080,462    3,917,752    4,642,496    5,691,382
                            =======      =========     =========     =========    =========    =========    =========    =========

*769 43. The fair market value of the common stock of the corporation on December 26, 1950 was $130 per share.
44. The payments of tax and interest referred to herein were received by the named District Directors of Internal Revenue in good faith in the course of their duties.

Conclusions of Law
1. The court has jurisdiction of the parties and of the subject matter of the action.
2. The proper value for gift tax purposes, to be placed upon the common stock of a family corporation is the fair market value of the common stock at the date of the gift.
3. The plaintiffs are entitled to judgment for the portion of the amount of gift tax paid because of valuation of Bartram Brothers common stock at a value in excess of $130 per share with interest as allowed by law.

Discussion
These are four gift tax cases consolidated for trial. The sole issue is the per share value of 2,740 shares of Bartram Bros. Corp. stock on the date of the gifts, December 26, 1950. The gift tax returns valued the stock at a 30% discount from net asset value of the corporation's underlying assets, a securities portfolio, the government assessment at the net asset value of the underlying assets. The corporation is a family holding company of considerable size. The 2,740 shares represented about 2% of the issued and outstanding stock of the company. The corporation is utilized primarily for the benefit of family trusts, whose trustees hold some 60% of its common stock and whose duration is not established, but presumably varies. Most of the individual shareholders, that is, those in the family group, are in the very highest income tax brackets.
The experts' comparisons are not sufficiently like to Bartram to establish a dependable yardstick. The evidence did establish certain elements that would be considered by investorsamong them, income, expense, underlying values, probability of early liquidation, breadth of market for the shares, percentage of total shares involved. The opinions of the expert witnesses appear to give too little weight to the excellent portfolio of diversified conservative investments, at small management expense, which was in 1950 and for some years thereafter in the same hands as for many years previously. The corporation's earnings over a five year period might well be taken as a guide to value, and taken alone might justify a valuation equal to net asset value. But uncertainty of ready salability of the shares because of the minority position may well justify a substantial discount to reach fair market value, although a discount of the order of 50% as advocated by the experts appears high.
A buyer would not be confined to a bargain hunting dealer, in view of the demand by small investors for diversification, reflected in the Lehman record, and in view of the number of other Bartram shareholders of great wealth, who would naturally prefer not to have strangers to the family group as minority shareholders. In practice, since the corporation was formed in 1925 no outside sales have occurred, by family or employees.
The defendants make much of Morris' dependence on the unlikelihood of liquidation or distribution of assets in the foreseeable future. The basis of this assumption is not as clear as it might have been had the terms of the trusts been proved, but it appears a reasonable assumption in view of the 25 year history of the corporation and the apparent use of it as an instrument to conserve assets and assure income of the family trusts. The corporation itself was formed under a perpetual charter. Morris had, however, no experience in sale of stock in a family corporation of the size, established history of income, of growth and of reinvestment of capital gains of the Bartram Corporation.
Morrissey's testimony is attacked for failure to analyze the 15 companies used for comparison to determine whether *770 their portfolios and investment policies were comparable to Bartram's, for using a misleading projection of Bartram's net investment income and for ignoring its record of realized and unrealized capital gains. The weight to be given Morrissey's testimony is seriously affected by these defects. Massie's testimony is also of doubtful value without a fuller analysis of the individual examples contained in his two lists, to determine which are more nearly comparable to Bartram in size, portfolio, investment policies and financial history. It may be that the factor of liquidity to which he gives paramount weight is of great importance, but he has failed to give us any reliable scale relating liquidity to price in his examples, upon which we could with any confidence place Bartram.
The most important factors in valuing such a closely held stock in a corporation whose assets are readily marketable are the market value of the underlying assets, its record and prospects of total net earnings and its record and prospect of dividend return. Here the value of the assets per common share is $163.04 on the critical date (December 26, 1950). For the five years ending in 1950 the earnings and dividend record were as follows:


                                        1946    1947    1948    1949    1950
                                        ____    ____    ____    ____    ____
  Net investment income per share       3.97    5.12    5.99    6.41    7.75
  after preferred dividends                           ave. 5.85
  Net profit per share after            6.20   11.53   10.15   10.14   13.08
  preferred dividends                                 ave. 10.22
  Dividends per share                   4.00    4.00    4.50    5.25    6.00
                                                      ave. 4.95

A majority position in the stock, able to control its financial and dividend policies, might well justify a value approaching liquidation value, as of course, would a larger proportionate holding sufficient to force liquidation if desirable. In spite of the excellent record of the corporation, however, the minority position in a closely held corporation not traded in on any market would undoubtedly cause investors generally to seek a discount from liquidating values, and disposal of the number of shares here involved would require some time, effort and expense. It appears probable, however, that a buyer could be found in the family group if not outside, willing to purchase for purposes similar to the existing trusts. A fair valuation would be at a discount of approximately 20%. This results in a price approximately 13 times average earnings for the preceding 5 years or 10 times the earnings for 1950.
It appears to be the Government's contention that since the burden is on plaintiffs, rejection of the experts' valuations requires judgment for defendants. This does not necessarily follow, for there is convincing evidence that a substantial discount should be applied and the percentage arrived at although not testified to by any witness, does not appear excessive on all the factors established by the evidence.
Weighing the opinions of the experts and their weaknesses pointed out above, and the arguments of the government based primarily on liquidating value, our best estimate is that market value per share on December 26, 1950 of the stock subject of gift was $130 per share, and we so find.
