¶1concurring: With some reluctance I concur in the holding that the shares of stock had a value of only $135 per share on the basic date. In my opinion a higher figure might well have been adopted. I am persuaded to accept the lower one for two reasons r first because I agree with my associates that the Stock Exchange prices do not accurately reflect the fair market value of such a large block of stock and second because the value determined seems to be supported by substantial evidence.
¶2The result reached upon the last point seems to be the only one which could be reached upon the present record. I therefore concur in it though it is quite unfortunate that a question of such importance must be resolved upon a mere “failure of proof.” A few remarks upon the general subject may not be amiss.
¶3The evaluation of a reversion interest — the right to receive a sum of money after the death of another — is at best a difficult one. A reasonably close approximation may be made through the use of mortality tables as one factor and an assumed interest rate as another. Ithaca Trust Co. v. United States, 279 U. S. 151. The two factors, however, ought to be as accurate as possible. We have heretofore expressed the view that the table used by respondent is incorrect and “outmoded” in dealing with an annuity question. Anna L. Raymond, 40 B. T. A. 244; affd., 114 Fed. (2d) 140; certiorari denied, 311 U. S. 710. Disregarding the rule of stare decisis, the evidence in the instant proceeding would clearly justify a similar conclusion if the same question were involved. The correctness of the interest factor, to say the least, has not been demonstrated. In my judgment it is too high. While it is true that an overly high interest rate may tend to offset any increase in the life expectancy of the one having the income for life, this is a mere fortuitous circumstance. The result of using two incorrect factors may well be to increase the error.
¶4The present question is almost an “imponderable.” Whether this tribunal should attempt to formulate a new table based upon the best and most reliable statistics and using an interest factor other than that used by the respondent or by actuaries is debatable. However that may be, it is devoutly hoped the administrative authorities will ultimately devise one which will not be so vulnerable to attack as the one now in use.
¶5dissenting: The Commissioner determined that the ■value of the du Pont shares on January 4,1939, was equal to the price at which similar shares were selling upon the market at that time. Actual sales of similar property on or near the valuation date are regarded as the best evidence of fair market value although this may be changed by other evidence showing that those sales do not reflect the fair market value. The prevailing opinion does not regard actual sales figures as truly reflecting value here because of the size of the block involved in the gift. It applies a so-called “blockage” rule. The rule as applied here means that we reduce the value of shares from the quoted market prices by accepting the opinions of witnesses for the petitioner, men experienced in marketing stocks, who have expressed opinions, based upon market conditions, that a seller would have been required to accept prices substantially under the market in order to sell a block of 52,900 shares within a reasonable time beginning on January 4, 1939.
¶6Fair market value has been defined for tax purposes as the price at which property would pass from a willing seller to a willing buyer if each had reasonable knowledge of the facts and was not acting under any compulsion. The existence of both of these imaginary people must be assumed. That is, it must be assumed that there is a person with reasonable knowledge of the facts and without any necessity for selling who desires to sell 52,900 shares of this stock, and also that there is another person willing to buy that number of shares who has reasonable knowledge of the facts and is not under any necessity of buying. The question is, Upon what price would they agree ? It seems to me that the prevailing opinion, relying upon the petitioner’s witnesses, considers the question too much from the standpoint of a seller, apparently a seller who had to convert the shares into cash. The shares here in question were not for sale. If it is pertinent to inquire how much a willing seller could have obtained for his shares, it would seem to be equally pertinent to inquire how much a willing buyer would have to pay for 52,900 shares if he had gone on the market at that time, and also to inquire what effect his efforts to buy would have had upon the market. Suppose the petitioner had used $8,100,312.50 to purchase du Pont shares on or about January 4, 1939, or had given that cash to the trust and the trust had attempted to purchase du Pont shares. Is there any reason to believe that the cash would have purchased substantially more than 52,900 shares? The question should not be examined from one side alone. It is not proper to assume that the purchaser would receive all of the advantages in the negotiations. The opinion evidence, which is all right as far as it goes, fails to convince me that the current market figures were not the best evidence of the fair market value of du Pont stock on January 4,1939.