Rev. Rul. 54-76

A decedent bequeathed shares of stock of a corporation, which reserved under its articles of organization an option to repurchase its stock at a specific price before any transfer could be made to others. The executors filed a petition in the local probate court asking whether the restriction on the transfer applied to a transfer by an executor to a specific legatee. The supreme court of the State, in affirming the decision of the lower court, concluded that the restrictions were binding on the decedent and the executors not only because they were included in the articles of incorporation and were, therefore, in effect a part of the charter of the corporation, but also by reason of the contract made with the corporation when the decedent accepted the certificates of stock containing the printed restrictions. Held although valid and enforceable restrictions affecting the transfer of stock do not necessarily control value for Federal estate tax purposes (see Rev. Rul. 157, C.B. 1953-2, 155), where a stockholder acquires stock from the corporation subject to an option reserved to the corporation in the articles of organization to repurchase the stock at a specific price before any sale or transfer, including any transfer at the death of the stockholder, can be validly made to others, the option price, in the absence of other material circumstances, will be accepted as the fair market value at the date of death, especially where the option is exercised by the corporation. See Estate of Albert L. Salt, et al. v. Commissioner , 17 T.C. 92, acquiescence, C.B. 1952-1, 4.