## Facts

- The estate of Dena B. Maytag held 133,859 shares of Maytag Company common stock at her death on January 18, 1934.
- On December 15, 1934, Elmer H. Maytag transferred 400,000 shares of the same stock by gift into four trusts (100,000 shares each) for his children.
- Maytag family members held a controlling majority of outstanding shares; a relatively small number of shares traded publicly on the New York Stock Exchange.
- Exchange prices were about $4.75 per share on January 18, 1934, and about $4.56 per share on December 15, 1934.
- The estate and donor reported $2.50 per share; the Commissioner asserted higher values based largely on unadjusted exchange quotations.
- The Board of Tax Appeals heard stipulated facts and expert valuation testimony about trading volume, market impact of selling large blocks, and company financial data.
- The Board found that selling blocks of 133,859 and 400,000 shares could not be accomplished at quoted prices without depressing the market.
- The Board determined values of $3.10 per share (estate block) and $3.80 per share (gift block), reducing the asserted deficiencies.

## Issues

1. Whether “fair market value” for estate and gift tax must equal unadjusted exchange quotations, regardless of the size of the stock block being valued.
2. Whether the trier of fact may consider block size, limited float, trading volume, and intrinsic or liquidating value evidence to value large blocks of exchange-traded stock.
3. Whether the Board’s valuation findings were supported by substantial evidence such that they were binding on appellate review.

## Decision

- The court affirmed the Board of Tax Appeals in both proceedings.
- It held that valuation is a question of fact and the Board’s findings must stand if supported by substantial evidence and based on a correct legal standard.
- The court upheld the Board’s use of block size and other valuation data to depart from unadjusted exchange quotations.
- The Board’s per-share valuations of $3.10 (estate) and $3.80 (gift) were sustained.

## Legal Principles

- Fair market value for federal estate and gift tax is the price at which property would change hands between a willing buyer and willing seller under the relevant circumstances.
- Stock-exchange quotations are relevant but not conclusive when they do not reflect the price realistically obtainable for the particular property being valued (including a very large block).
- In valuing a large block of stock, the factfinder may consider market impact from block size, normal trading volume, limited public float, and company financial factors (including earnings, assets, and liquidating value).
- Appellate review does not permit reweighing valuation evidence where the administrative factfinder’s determination is supported by substantial evidence.

## Conclusion

The court upheld the Board’s reduced estate- and gift-tax valuations, ruling that fair market value need not equal unadjusted exchange prices when the size and marketability of a very large stock block show that quoted prices would not be obtainable in an actual sale.


Helvering v. Maytag, 125 F.2d 55 (8th Cir. 1942)