Morrissey v. Commissioner (243 F.3d 1145, 2001)

NOONAN, Circuit Judge:

The executors of the Estate of Alice Friedlander Kaufman appeal the judgment of the Tax Court assessing a deficiency of $209,546 against the Estate. We hold that the Tax Court disregarded what should have been dispositive, viz., the price at which stock owned by the Estate had traded between willing and knowledgeable buyers and sellers. Accordingly, we reverse the judgment and remand to the Tax Court for entry of judgment for the Estate.

BACKGROUND AND PROCEEDINGS

The asset of the Estate to be valued is 46,020 class A shares of Seminole Manufacturing Co. (Seminole). Seminole’s sole asset is the stock of Kazoo, a manufacturer of uniforms sold directly to stores and industrial launderers. Kazoo is the largest seller of professional uniforms in a highly competitive business. Seminole’s income after taxes ranged from a loss of $5,042,168 in 1991 to a profit of $1,551,209 for 1992 and a profit of $2,570,085 in 1993.

The stock of Seminole at the time of valuation, April 14, 1994, was held as follows:

Class A Shareholders Shares Ownership Class B Percentages Shares A B A & B

19.86 21.51 46,020 Decedent s Estate

17.30 18.73 40,080 A. Max Weitzenhoffer, Jr.

15.32 16.59 35,500 Elizabeth Weitzenhoffer Blass

31,800 Clara Weitzenhoffer, trustee of the Clara Weitzenhoffer trust -3 to CO vH 4^ CO 05

9,600 92.13 16,400 John Gunzler N) to H t — i CD

Jerome K. Altshuler, either individually or as executor CR CD LO O 05 CD 05 O

Edmund M. Hoffman CO to ^ 05 -3 O O <=>

7,320 Decedent and Diane K. Fantl, trustees under will of Julia Kaufman CD h CO