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When Howard Gilman (decedent) died in 1998, his estate
consisted primarily of stock of Gilman Investment Co., Inc.
(GIC), a holding company for decedent’s businesses and other
assets (the Gilman assets). Before he died, decedent formed the
Howard Gilman Foundation (the foundation). Decedent bequeathed
the residue of his estate to the foundation.
Bernard D. Bergreen (Bergreen) and Natalie Moody (Moody)
were coexecutors of the estate, the managers of a limited
liability company named HG Estate, LLC (HG), officers of GIC, and
members of the board of directors of the foundation.
Bergreen and Moody hired William Davis (Davis) to serve as chief
operating officer of Gilman Paper Co. and Gilman Building
Products, effective June 1998.
In 1999, as part of a tax-free reorganization under section
368,1 the executors transferred the GIC stock and all of GIC’s
assets to HG and its subsidiaries. The foundation was the only
member of HG. Bergreen received tax advice that, if the
restructuring were completed by January 28, 1999, and the assets
then sold, HG would save $160 million in tax on capital gains
which would been have resulted if the estate had sold the assets.
1 Section references are to the Internal Revenue Code in
effect as of the date of decedent’s death. Rule references are
to the Tax Court Rules of Practice and Procedure. Amounts have
been rounded to the nearest dollar.
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Last modified: May 25, 2011