Redstone v. Commissioner – Timing is critical when relying on arm’s-length stock transactions

Description

Abstract: An arm’s-length transaction involving the subject company’s stock that occurs before or after the valuation date can provide a meaningful indication of fair market value. This article concerns a recent case in which the U.S. Tax Court held that the best evidence of the stock’s value for gift tax purposes was the price the company had paid to redeem another shareholder’s stock three weeks before the valuation date. Ultimately, the case shows how events at or near the time of the valuation date generally are the most reliable indicators of value.