Redemption Obligation Did Not Reduce Value of Shares

Under an agreement with the two shareholders of a corporation, the corporation was obligated to purchase shares upon the death of a shareholder for a fixed price, and the corporation purchased life insurance on the shareholders in order to have the cash needed to pay the purchase price. Upon the death of the majority shareholder, the life insurance proceeds were included in the value of the corporation’s shares for federal estate tax purposes, and the obligation of the corporation to purchase the shares was not a debt that reduced the value of the shares. Connelly v. United States, ___ U.S. ___, No. 23-146 (6/6/2024).

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