Section of Taxation Publications
  VOL. 56
NO. 1
FALL 2002
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Allowing Sales Between Related Parties in Closely Held Corporations to Evidence Fair Market Value: A Departure From the Norm in: Morrissey v. Commissioner
Emily A. Whelan


In Morrissey v. Commissioner, the Court of Appeals for the Ninth Circuit reversed the Tax Court and held that in valuing an estate’s interest in a closely held corporation, sales of a minority interest in the corporation’s stock between distant family members were good evidence of fair market value. In holding for the estate, the court found that the Tax Court had no rational reason for disregarding the sales as evidence of fair market value.

Part I of this Note discusses the circumstances of the case and the procedural history that led to the court’s decision. Part II explains the Ninth Circuit’s error in overruling the Tax Court’s determination that the factual evidence surrounding the sales between distant family members was insufficient to support reliance thereon for fair market value. Part III argues that the court’s holding will lead to inaccurate valuations of interests in closely held corporations and encourage tax avoidance.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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