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The U.S. Supreme Court’s decision in Connelly v. United States1 has spawned a plethora of articles covering the case’s legal, tax, estate-planning and valuation aspects.
It’s highly unusual for the Supreme Court to involve itself in tax matters, but it did so to resolve a split between the U.S. Court of Appeals for the Eleventh Circuit and the Eighth Circuit over the issue of whether life insurance proceeds that will be used to redeem a decedent’s shares must be included when calculating the value of those shares for purposes of the federal estate tax. In Estate of Blount v. Commissioner, the Eleventh Circuit opined that such cash didn’t add to a company’s value because it was offset by an equal corporate obligation.2 In Connelly, the Ei...
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