The opinion of the court was delivered by: COHILL, JR.
In this action plaintiff, the Estate of William E. Newcomer, Deceased, William A. Newcomer, Executor, seeks refund of federal estate taxes paid in accordance with an Internal Revenue Service ("IRS") review. The sole issue is to determine the fair market value of 45,955 shares of common stock of Newcomer Products, Inc. ("NPI") on July 6, 1967, the date of death of William E. Newcomer (the "decedent"). This question is one of fact. See, e.g., Diefenthal v. United States, 343 F. Supp. 1208, 1210 (E.D.La. 1972). Jurisdiction is provided by 28 U.S.C. § 1346(a)(1).
§ 2031 of the Internal Revenue Code of 1954, 26 U.S.C. § 2031, defines the value of the gross estate of the decedent to include the value of all intangible personal property owned by the decedent at the time of his death. For unlisted stock, in the absence of sales thereof, subsection (b) prescribes that the valuation of such stock shall be determined, inter alia, by reference to stock of similar corporations traded on an exchange.
Treas.Reg. § 20.2031-2 (26 C.F.R. § 20.2031) provides that the value of stock is the fair market value per share on the applicable valuation date. Subsection (b) thereof fixes the fair market value based on selling prices, and subsection (d) thereof defines the fair market value based on incomplete selling prices or bid and asked prices. The fair market value is "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." Treas.Reg. § 20.2031-1(b).
Treas.Reg. § 20.2031-2(f) states that, where selling prices and bona fide bid and asked prices are unavailable, the fair market value of stock is to be determined by taking into consideration the company's net worth, prospective earning power and other relevant factors, including:
"The good will of the business; the economic outlook in the particular industry; the company's position in the industry and its management; the degree of control of the business represented by the block of stock to be valued; and the values of securities of corporations engaged in the same or similar lines of business which are listed on a stock exchange."
In addition, the IRS has outlined factors to consider in valuing stock of closely-held corporations. § 4 ofRev.Rul. 59-60, 1959-1 C.B. 237 provides:
"Sec. 4. Factors to Consider.
It is advisable to emphasize that in the valuation of the stock of closely held corporations or the stock of corporations where market quotations are either lacking or too scarce to be recognized, all available financial data, as well as all relevant factors affecting the fair market value, should be considered. The following factors, although not all-conclusive are fundamental and require careful analysis in each case:
The nature of the business and the history of the enterprise from its inception.
The economic outlook in general and the condition and outlook of the specific industry in particular.