Estate of J. E. O'connell, James O'COnnell v. Commissioner of Internal Revenue

This case involves a dispute over the valuation for estate tax purposes of two blocks of stock in close corporations held by the decedent, J. E. O’Connell, at his death. One block is an 80% interest in R. V. Ranch Corporation (R.V.); the other is a 95% interest in Capri Corporation (Capri). The applicable code section is 26 U.S.C. § 2031 . The appellant seeks to overturn the valuations fixed by the Tax Court. This court’s jurisdiction lies under 26 U.S.C. § 7482 (1976). We affirm in part and reverse and remand in part.

I.

THE FACTS

Capri was a holding company whose assets consisted of various pieces of real estate, a portfolio of securities, several non-operating subsidiaries, and a 73% interest in Glacier General Assurance Company. The values of all of Capri’s assets, other than its interest in Glacier General Assurance Company (Glacier), were stipulated between the parties. The dispute with respect to the Capri stock centers on the value of Capri’s interest in Glacier, and on the method for valuing Capri’s stock relative to its net asset value. The Estate contends that Glacier should have been valued according to a formula which essentially computes its net asset value,…