Connelly v. United States

Summary

A corporation’s contractual obligation to redeem shares is not necessarily a liability that reduces a corporation’s value for purposes of the federal estate tax.

Text

PRELIMINARY PRINT 
Volume 602 U. S. Part 1 
Pages 257–267 
OFFICIAL REPORTS 
OF 
THE SUPREME COURT 
June 6, 2024 
REBECCA A. WOMELDORF 
reporter of decisions 
Page Proof Pending Publication
NOTICE: This preliminary print is subject to formal revision before 
the bound volume is published. Users are requested to notify the Reporter 
of Decisions, Supreme Court of the United States, Washington, D.C. 20543, 
[email protected], of any typographical or other formal errors.

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OCTOBER TERM, 2023 257 
Syllabus 
CONNELL Y, as executor of the ESTATE OF 
CONNELL Y v. UNITED STATES 
certiorari to the united states court of appeals for 
the eighth circuit 
No. 23–146. Argued March 27, 2024—Decided June 6, 2024 
Michael and Thomas Connelly were the sole shareholders in Crown C Sup-
ply, a small building supply corporation. The brothers entered into an 
agreement to ensure that Crown would stay in the family if either 
brother died. Under that agreement, the surviving brother would have 
the option to purchase the deceased brother's shares. If he declined, 
Crown itself would be required to redeem (i.e ., purchase) the shares. 
To ensure that Crown would have enough money to redeem the shares 
if required, it obtained $3.5 million in life insurance on each brother. 
After Michael died, Thomas elected not to purchase Michael's shares, 
thus triggering Crown's obligation to do so. Michael's son and Thomas 
agreed that the value of Michael's shares was $3 million, and Crown paid 
the same amount to Michael's estate. As the executor of Michael's es-
tate, Thomas then fled a federal tax return for the estate, which re-
ported the value of Michael's shares as $3 million. The Internal Reve-
nue Service (IRS) audited the return. During the audit, Thomas 
obtained a valuation from an outside accounting frm. That frm deter-
mined that Crown's fair market value at Michael's death was $3.86 mil-
lion, an amount that excluded the $3 million in insurance proceeds used 
to redeem Michael's shares on the theory that their value was offset by 
the redemption obligation. Because Michael had held a 77.18% owner-
ship interest in Crown, the analyst calculated the value of Michael's 
shares as approximately $3 million ($3.86 million × 0.7718). The IRS 
disagreed. It insisted that Crown's redemption obligation did not offset 
the life-insurance proceeds, and accordingly, assessed Crown's total 
value as $6.86 million ($3.86 million + $3 million). The IRS then calcu-
lated the value of Michael's shares as $5.3 million ($6.86 million × 0.7718). 
Based on this higher valuation, the IRS determined that the estate 
owed an additional $889,914 in taxes. The estate paid the defciency 
and Thomas, acting as executor, sued the United States for a refund. 
The District Court granted summary judgment to the Government. 
The court held that, to accurately value Michael's shares, the $3 million 
in life-insurance proceeds must be counted in Crown's valuation. The 
Eighth Circuit affrmed.

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258 CONNELL Y v. UNITED STATES 
Syllabus 
Held: A corporation's contractual obligation to redeem shares is not neces-
sarily a liability that reduces a corporation's value for purposes of the 
federal estate tax. 
When calculating the federal estate tax, the value of a decedent's 
shares in a closely held corporation must refect the corporation's fair 
market value. And, life-insurance proceeds payable to a corporation 
are an asset that increases the corporation's fair market value. The 
question here is whether Crown's contractual obligation to redeem Mi-
chael's shares at fair market value offsets the value of life-insurance 
proceeds committed to funding that redemption. 
The answer is no. Because a fair-market-value redemption has no 
effect on any shareholder's economic interest, no hypothetical buyer 
purchasing Michael's shares would have treated Crown's obligation to 
redeem Michael's shares at fair market value as a factor that reduced 
the value of those shares. At the time of Michael's death, Crown was 
worth $6.86 million—$3 million in life-insurance proceeds earmarked for 
the redemption plus $3.86 million in other assets and income-generating 
potential. Anyone purchasing Michael's shares would acquire a 77.18% 
stake in a company worth $6.86 million, along with Crown's obligation 
to redeem those shares at fair market value. A buyer would therefore 
pay up to $5.3 million for Michael's shares ($6.86 million × 0.7718)—i.e ., 
the value the buyer could expect to receive in exchange for Michael's 
shares when Crown redeemed them at fair market value. Crown's 
promise to redeem Michael's shares at fair market value did not reduce 
the value of those shares. 
Thomas's efforts to resist this straightforward conclusion fail. He 
views the relevant inquiry as what a buyer would pay for shares that 
make up the same percentage of the less-valuable corporation that ex-
ists after the redemption. For calculating the estate tax, however, the 
whole point is to assess how much Michael's shares were worth at the 
time that he died—before Crown spent $3 million on the redemption 
payment. See 26 U. S. C. § 2033 (defning the gross estate to “include 
the value of all property to the extent of the interest therein of the 
decedent at the time of his death”). A hypothetical buyer would treat 
the life-insurance proceeds that would be used to redeem Michael's 
shares as a net asset. 
Thomas's argument that the redemption obligation was a liability 
also cannot be reconciled with the basic mechanics of a stock redemp-
tion. He argues that Crown was worth only $3.86 million before the 
redemption, and thus that Michael's shares were worth approximately 
$3 million ($3.86 million × 0.7718). But he also argues that Crown 
was worth $3.86 million after Michael's shares were redeemed. See 
Reply Brief 6. Both cannot be right: A corporation that pays out

Cite as: 602 U. S. 257 (2024) 259 
Opinion of the Court 
$3 million to redeem shares should be worth less than before the 
redemption. 
Finally, Thomas asserts that affrming the decision below will make 
succession planning more diffcult for closely held corporations. But 
the result here is simply a consequence of how the Connelly brothers 
chose to structure their agreement. Pp. 263–267. 
70 F. 4th 412, affrmed. 
Thomas, J., delivered the opinion for a unanimous Court. 
Kannon K. Shanmugam argued the cause for petitioner. 
With him on the briefs were William T. Marks, Yishai 
Schwartz, and Robert L. Devereux. 
Yaira Dubin argued the cause for the United States as 
amicus curiae supporting neither party. With her on the 
brief were Solicitor General Prelogar, Deputy Assistant At-
torney General Hubbert, Deputy Solicitor General Gannon, 
Charles L. McCloud, Francesca Ugolini, Jennifer M. Rubin, 
and Norah E. Bringer.* 
Justice Thomas delivered the opinion of the Court. 
Michael and Thomas Connelly owned a building supply cor-
poration. The brothers entered into an agreement to ensure 
that the company would stay in the family if either brother 
died. Under that agreement, the corporation could be re-
quired to redeem (i.e ., purchase) the deceased brother's 
shares. To fund the possible share redemption, the corpora-
tion obtained life insurance on each brother. After Michael 
died, a narrow dispute arose over how to value his shares for 
calculating the estate tax. The central question is whether 
the corporation's obligation to redeem Michael's shares was 
a liability that decreased the value of those shares. We con-
clude that it was not and therefore affrm. 
*Jonathan C. Bond, Saul Mezei, Tyler S. Badgley, Elizabeth Gaudio 
Milito, and Patrick J. Moran fled a brief for the Chamber of Commerce 
of the United States of America et al. as amici curiae urging reversal. 
Briefs of amici curiae urging affrmance were fled for Brant Hellwig, 
pro se; and for Adam Chodorow, pro se. 
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260 CONNELL Y v. UNITED STATES 
Opinion of the Court 
I 
A 
Congress has long imposed a tax “on the transfer of the 
taxable estate of every decedent who is a citizen or resident 
of the United States.” 26 U. S. C. § 2001(a). 1 A decedent's 
“taxable estate” is the value of “all property, real or per-
sonal, tangible or intangible,” owned by the decedent “at the 
time of his death,” minus applicable deductions. §§ 2031(a), 
2051. Imposing the estate tax thus requires calculating the 
value of the property in the decedent's estate. In general, 
the lodestar for that assessment is “fair market value,” which 
“is the price at which the property would change hands be-
tween a willing buyer and a willing seller, neither being 
under any compulsion to buy or to sell and both having rea-
sonable knowledge of relevant facts.” 26 CFR § 20.2031– 
1(b) (2021). 
A decedent's taxable estate includes his shares in a closely 
held corporation. 26 U. S. C. § 2031(b). Closely held corpo-
rations ordinarily have only a few shareholders (often within 
the same family) and, unlike public corporations, those share-
holders typically participate in the corporation's day-to-day 
management. 3 J. Cox & T. Hazen, Law of Corporations 
§ 14:1 (3d ed. 2010) (Cox & Hazen). Given this close working 
relationship, shareholders sometimes enter into an agree-
ment to restrict the transfer of shares to outside investors. 
3 id., § 14:9. One such arrangement involves “giving the 
corporation or the other shareholders the right to purchase 
the shares of a holder on his death.” Ibid. A related ar-
rangement, called a share redemption agreement, contractu-
ally requires a corporation to repurchase a deceased share-
holder's shares. Although such an agreement may delineate 
1 Not all estates are subject to the estate tax. Because certain credits 
are allowed against the estate tax, any estate valued below a certain 
threshold (today, about $13.6 million) is not subject to the tax. See 26 
U. S. C. § 2010(c). 
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Cite as: 602 U. S. 257 (2024) 261 
Opinion of the Court 
how to set a price for the shares, it is ordinarily not disposi-
tive for valuing the decedent's shares for the estate tax. 
See 26 U. S. C. § 2703. As a general rule, the fair market 
value of the corporation determines the value of the 
shares, and one must therefore consider “the company's net 
worth, prospective earning power and dividend-paying ca-
pacity, and other relevant factors,” “including proceeds of life 
insurance policies payable to . . . the company.” 26 CFR 
§ 20.2031–2(f)(2). 
B 
Brothers Michael and Thomas Connelly were the sole 
shareholders in Crown C Supply, a small but successful 
building supply corporation in St. Louis, Missouri. Michael 
owned 77.18% of Crown's outstanding shares (385.9 out of 
500 shares), and Thomas owned the remaining 22.82% (114.1 
shares). The brothers entered into an agreement with 
Crown to ensure a smooth transition of ownership and keep 
Crown in the family in the event one of the brothers died. 
The agreement provided that if either Michael or Thomas 
died, the surviving brother would have the option to pur-
chase the deceased brother's shares. And, if the surviving 
brother declined to do so, then Crown itself would be con-
tractually required to redeem the shares. With an excep-
tion not relevant here, the agreement specifed that the re-
demption price for each share would be based upon an 
outside appraisal of Crown's fair market value. App. 12–14. 
To ensure that Crown would have enough money to redeem 
the shares if required, Crown obtained $3.5 million in life 
insurance on each brother. 
When Michael died in 2013, Thomas opted not to purchase 
Michael's shares. As a result, Crown was obligated under 
the agreement to redeem Michael's shares. Rather than se-
cure an outside appraisal of the company's fair market value 
(as the agreement contemplated), Michael's son and Thomas 
agreed in an “amicable and expeditious manner” that the 
value of Michael's shares was $3 million. Id., at 25–26. 
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262 CONNELL Y v. UNITED STATES 
Opinion of the Court 
Crown then used $3 million of the life-insurance proceeds to 
redeem Michael's shares, leaving Thomas as Crown's sole 
shareholder. 
As the executor of Michael's estate, Thomas then fled a 
federal tax return for the estate. The return reported the 
value of Michael's shares as $3 million, in accordance with 
the agreement between Michael's son and Thomas. The In-
ternal Revenue Service (IRS) audited the return. During 
the audit, Thomas obtained a valuation from an accounting 
frm. The frm's analyst took as given the holding in Estate 
of Blount v. Commissioner, 428 F. 3d 1338 (CA11 2005), which 
concluded that insurance proceeds should be “deduct[ed] . . . 
from the value” of a corporation when they are “offset by an 
obligation to pay those proceeds to the estate in a stock buy-
out.” Id., at 1345. The analyst thus excluded the $3 million 
in insurance proceeds used to redeem Michael's shares, and de-
termined that Crown's fair market value at Michael's death 
was $3.86 million. Because Michael held a 77.18% owner-
ship interest, the analyst calculated the value of Michael's 
shares as approximately $3 million ($3.86 million × 0.7718). 
The IRS took a different view, insisting that Crown's 
redemption obligation did not offset the life-insurance 
proceeds. The IRS counted the $3 million in life-insurance 
proceeds excluded by the analyst and assessed Crown's total 
value as $6.86 million ($3.86 million + $3 million). And, the 
IRS thus calculated the value of Michael's shares as $5.3 mil-
lion ($6.86 million × 0.7718). Based on this higher valuation, 
the IRS determined that the estate owed an additional 
$889,914 in taxes. 
The estate paid the defciency and Thomas, acting as exec-
utor, sued the United States for a refund. As relevant, 
Thomas argued that the $3 million in life-insurance proceeds 
used to redeem Michael's shares should not be counted when 
calculating the value of those shares. The District Court 
granted summary judgment to the Government, concluding 
that Michael's estate was not entitled to a refund. Connelly 
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Cite as: 602 U. S. 257 (2024) 263 
Opinion of the Court 
v. Department of Treasury , IRS, 2021 WL 4281288, *17 (ED 
Mo., Sept. 21, 2021). The court held that the $3 million in 
life-insurance proceeds must be counted to accurately value 
Michael's shares. It explained that, under customary valua-
tion principles, Crown's obligation to redeem Michael's 
shares was not a liability that reduced the corporation's 
fair market value. Id., at *14. The court therefore held 
that Crown's redemption obligation did not offset the life-
insurance proceeds. Id., at *15–*17. The Court of Appeals 
affrmed on the same basis. Connelly v. Department of 
Treasury, IRS, 70 F. 4th 412 (CA8 2023). 
We granted certiorari, 601 U. S. ––– (2023), to address 
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. 
We now affrm. 
II 
The dispute in this case is narrow. All agree that, when 
calculating the federal estate tax, the value of a decedent's 
shares in a closely held corporation must refect the cor-
poration's fair market value. And, all agree that life-
insurance proceeds payable to a corporation are an asset 
that increases the corporation's fair market value. The 
only question is whether Crown's contractual obligation to 
redeem Michael's shares at fair market value offsets the 
value of life-insurance proceeds committed to funding that 
redemption. 
Thomas argues that a contractual obligation to redeem 
shares is a liability that offsets the value of life-insurance 
proceeds used to fulfll that obligation. Brief for Petitioner 
17. He accordingly contends that anyone purchasing “a sub-
set of the corporation's shares would treat the two as cancel-
ing each other out.” Ibid. By contrast, the Government 
argues that Crown's obligation to pay for Michael's shares 
did not reduce the value of those shares. It contends that 
“no real-world buyer or seller would have viewed the re-
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264 CONNELL Y v. UNITED STATES 
Opinion of the Court 
demption obligation as an offsetting liability.” Brief for 
United States 15. We agree with the Government. 
An obligation to redeem shares at fair market value does 
not offset the value of life-insurance proceeds set aside for 
the redemption because a share redemption at fair market 
value does not affect any shareholder's economic interest. 
A simple example proves the point. Consider a corporation 
with one asset—$10 million in cash—and two shareholders, 
A and B, who own 80 and 20 shares respectively. Each indi-
vidual share is worth $100,000 ($10 million ÷ 100 shares). 
So, A's shares are worth $8 million (80 shares × $100,000) and 
B's shares are worth $2 million (20 shares × $100,000). To 
redeem B's shares at fair market value, the corporation 
would thus have to pay B $2 million. After the redemption, 
A would be the sole shareholder in a corporation worth $8 
million and with 80 outstanding shares. A's shares would 
still be worth $100,000 each ($8 million ÷ 80 shares). Eco-
nomically, the redemption would have no impact on either 
shareholder. The value of the shareholders' interests after 
the redemption—A's 80 shares and B's $2 million in cash— 
would be equal to the value of their respective interests in 
the corporation before the redemption. Thus, a corporation's 
contractual obligation to redeem shares at fair market value 
does not reduce the value of those shares in and of itself. 
Because a fair-market-value redemption has no effect on 
any shareholder's economic interest, no willing buyer pur-
chasing Michael's shares would have treated Crown's obliga-
tion to redeem Michael's shares at fair market value as a 
factor that reduced the value of those shares. At the time 
of Michael's death, Crown was worth $6.86 million—$3 mil-
lion in life-insurance proceeds earmarked for the redemption 
plus $3.86 million in other assets and income-generating po-
tential. Anyone purchasing Michael's shares would acquire 
a 77.18% stake in a company worth $6.86 million, along with 
Crown's obligation to redeem those shares at fair market 
value. A buyer would therefore pay up to $5.3 million for 
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Cite as: 602 U. S. 257 (2024) 265 
Opinion of the Court 
Michael's shares ($6.86 million × 0.7718)—i.e ., the value the 
buyer could expect to receive in exchange for Michael's shares 
when Crown redeemed them at fair market value. We thus 
conclude that Crown's promise to redeem Michael's shares at 
fair market value did not reduce the value of those shares. 
Thomas resists this straightforward conclusion. He sug-
gests that Crown's redemption obligation “would make it im-
possible” for a hypothetical buyer seeking to purchase 
77.18% of Crown “to capture the full value of the insurance 
proceeds.” Brief for Petitioner 26. That is so, according 
to Thomas, because the insurance proceeds would leave the 
company as soon as they arrived to complete the redemption. 
He argues that the “buyer would thus not consider proceeds 
that would be used for redemption as net assets.” Ibid. In 
other words, Thomas views the relevant inquiry as what a 
buyer would pay for shares that make up the same percent-
age of the less-valuable corporation that exists after the re-
demption. See Estate of Blount v. Commissioner, 87 TCM 
1303 (2004), ¶2004–116 RIA Memo TC, aff'd in part and rev'd 
in part, 428 F. 3d 1338 (CA11 2005); see also A. Chodorow, 
Valuing Corporations for Estate Tax Purposes, 3 Hastings 
Bus. L. J. 1, 25 (2006) (“Any valuation that takes the redemp-
tion obligation into account effectively values the corporation 
on a `post-redemption' basis, i. e., after the decedent's shares 
have been redeemed”). But, for calculating the estate tax, 
the whole point is to assess how much Michael's shares were 
worth at the time that he died—before Crown spent $3 mil-
lion on the redemption payment. See 26 U. S. C. § 2033 (de-
fning the gross estate to “include the value of all property 
to the extent of the interest therein of the decedent at the 
time of his death”); 26 CFR § 20.2031–1(b) (the “value of 
every item of property includible in a decedent's gross estate 
. . . is its fair market value at the time of the decedent's 
death” (emphasis added)). A hypothetical buyer would thus 
treat the life-insurance proceeds that would be used to re-
deem Michael's shares as a net asset. 
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266 CONNELL Y v. UNITED STATES 
Opinion of the Court 
Moreover, Thomas's argument that the redemption obliga-
tion was a liability cannot be reconciled with the basic me-
chanics of a stock redemption. As the District Court ex-
plained, when a shareholder redeems his shares he “is 
essentially `cashing out' his share of ownership in the com-
pany and its assets.” 2021 WL 4281288, *16. That transac-
tion necessarily reduces a corporation's total value. And, 
because there are fewer outstanding shares after the re-
demption, the remaining shareholders are left with a larger 
proportional ownership interest in the less-valuable corpo-
ration. Thomas's understanding, however, would turn this 
ordinary process upside down. In Thomas's view, Crown's 
redemption of Michael's shares left Thomas with a larger 
ownership stake in a company with the same value as before 
the redemption. Thomas argues that Crown was worth 
only $3.86 million before the redemption, and thus that Mi-
chael's shares were worth approximately $3 million ($3.86 
million × 0.7718). But, he also argues that Crown was 
worth $3.86 million after Michael's shares were redeemed. 
See Reply Brief 6. That cannot be right: A corporation that 
pays out $3 million to redeem shares should be worth less 
than before the redemption. See Cox & Hazen § 21:2. 
Thomas's argument thus cannot be reconciled with an ele-
mentary understanding of a stock redemption. 
Finally, Thomas asserts that affrming the decision below 
will make succession planning more diffcult for closely held 
corporations. He reasons that if life-insurance proceeds 
earmarked for a share redemption are a net asset for estate-
tax purposes, then “Crown would have needed an insurance 
policy worth far more than $3 million in order to redeem 
Michael's shares at fair market value.” Brief for Petitioner 
33. True enough, but that is simply a consequence of how 
the Connelly brothers chose to structure their agreement. 
There were other options. For example, the brothers could 
have used a cross-purchase agreement—an arrangement in 
which shareholders agree to purchase each other's shares at 
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Page Proof Pending Publication
Cite as: 602 U. S. 257 (2024) 267 
Opinion of the Court 
death and purchase life-insurance policies on each other to 
fund the agreement. See S. Pratt, Valuing a Business 821 
(6th ed. 2022). A cross-purchase agreement would have al-
lowed Thomas to purchase Michael's shares and keep Crown 
in the family, while avoiding the risk that the insurance pro-
ceeds would increase the value of Michael's shares. The 
proceeds would have gone directly to Thomas—not to 
Crown. But, every arrangement has its own drawbacks. A 
cross-purchase agreement would have required each brother 
to pay the premiums for the insurance policy on the other 
brother, creating a risk that one of them would be unable to 
do so. And, it would have had its own tax consequences. 
By opting to have Crown purchase the life-insurance policies 
and pay the premiums, the Connelly brothers guaranteed 
that the policies would remain in force and that the insurance 
proceeds would be available to fund the redemption. As we 
have explained, however, this arrangement also meant that 
Crown would receive the proceeds and thereby increase the 
value of Michael's shares. Thomas's concerns about the im-
plications of how he and Michael structured their agreement 
are therefore misplaced. 
III 
We hold that Crown's contractual obligation to redeem Mi-
chael's shares did not diminish the value of those shares.
2 
Because redemption obligations are not necessarily liabilities 
that reduce a corporation's value for purposes of the federal 
estate tax, we affrm the judgment of the Court of Appeals. 
It is so ordered. 
2 We do not hold that a redemption obligation can never decrease a cor-
poration's value. A redemption obligation could, for instance, require a 
corporation to liquidate operating assets to pay for the shares, thereby 
decreasing its future earning capacity. We simply reject Thomas's posi-
tion that all redemption obligations reduce a corporation's net value. Be-
cause that is all this case requires, we decide no more.

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Reporter’s Note 
The attached opinion has been revised to refect the usual publication 
and citation style of the United States Reports. The revised pagination 
makes available the offcial United States Reports citation in advance of 
publication. The syllabus has been prepared by the Reporter of Decisions 
for the convenience of the reader and constitutes no part of the opinion of 
the Court. A list of counsel who argued or fled briefs in this case, and 
who were members of the bar of this Court at the time this case was 
argued, has been inserted following the syllabus. Other revisions may 
include adjustments to formatting, captions, citation form, and any errant 
punctuation. The following additional edits were made: 
None

Retrieval chunks

• #1

  PRELIMINARY PRINT Volume 602 U. S. Part 1 Pages 257–267 OFFICIAL REPORTS OF THE SUPREME COURT June 6, 2024 REBECCA A. WOMELDORF reporter of decisions Page Proof Pending Publication NOTICE: This preliminary print is subject to formal revision before the bound volume is published. Users are requested to notif…

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  value as $6.86 million ($3.86 million + $3 million). The IRS then calcu- lated the value of Michael's shares as $5.3 million ($6.86 million × 0.7718). Based on this higher valuation, the IRS determined that the estate owed an additional $889,914 in taxes. The estate paid the defciency and Thomas, acting as executo…

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  make up the same percentage of the less-valuable corporation that ex- ists after the redemption. For calculating the estate tax, however, the whole point is to assess how much Michael's shares were worth at the time that he died—before Crown spent $3 million on the redemption payment. See 26 U. S. C. § 2033 (defni…

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  died, a narrow dispute arose over how to value his shares for calculating the estate tax. The central question is whether the corporation's obligation to redeem Michael's shares was a liability that decreased the value of those shares. We con- clude that it was not and therefore affrm. *Jonathan C. Bond, Saul Mez…

• #5

  are allowed against the estate tax, any estate valued below a certain threshold (today, about $13.6 million) is not subject to the tax. See 26 U. S. C. § 2010(c). Page Proof Pending Publication Cite as: 602 U. S. 257 (2024) 261 Opinion of the Court how to set a price for the shares, it is ordinarily not disposi-…

• #6

  As the executor of Michael's estate, Thomas then fled a federal tax return for the estate. The return reported the value of Michael's shares as $3 million, in accordance with the agreement between Michael's son and Thomas. The In- ternal Revenue Service (IRS) audited the return. During the audit, Thomas obtained …

• #7

  that Crown's redemption obligation did not offset the life- insurance proceeds. Id., at *15–*17. The Court of Appeals affrmed on the same basis. Connelly v. Department of Treasury, IRS, 70 F. 4th 412 (CA8 2023). We granted certiorari, 601 U. S. ––– (2023), to address whether life-insurance proceeds that will be u…

• #8

  A would be the sole shareholder in a corporation worth $8 million and with 80 outstanding shares. A's shares would still be worth $100,000 each ($8 million ÷ 80 shares). Eco- nomically, the redemption would have no impact on either shareholder. The value of the shareholders' interests after the redemption—A's 80 …

• #9

  1303 (2004), ¶2004–116 RIA Memo TC, aff'd in part and rev'd in part, 428 F. 3d 1338 (CA11 2005); see also A. Chodorow, Valuing Corporations for Estate Tax Purposes, 3 Hastings Bus. L. J. 1, 25 (2006) (“Any valuation that takes the redemp- tion obligation into account effectively values the corporation on a `post-…

• #10

  Thomas's argument thus cannot be reconciled with an ele- mentary understanding of a stock redemption. Finally, Thomas asserts that affrming the decision below will make succession planning more diffcult for closely held corporations. He reasons that if life-insurance proceeds earmarked for a share redemption are …

• #11

  2 We do not hold that a redemption obligation can never decrease a cor- poration's value. A redemption obligation could, for instance, require a corporation to liquidate operating assets to pay for the shares, thereby decreasing its future earning capacity. We simply reject Thomas's posi- tion that all redemption …