The opinion
MuRdock, J., dissenting: 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.
Fair 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.