Estate of Duane B. Farnam, Deceased, Mark D. Farnam, Personal Representative, and Estate of Lois L. Farnam, Deceased, Mark D. Farnam, Personal Representative - Page 2
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SWIFT, Judge: Respondent determined deficiencies of
$763,131 and $1,491,616 in the Federal estate tax of the estates
of decedents Duane B. Farnam (DBF Estate) and Lois L. Farnam (LLF
The issue for decision is whether, for purposes of the
liquidity test of section 2057(b)(1)(C), decedents’ loans to
their family-owned corporation are to be treated as “interests”
in the corporation.
Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) as in effect for the dates of
decedents’ deaths, and all Rule references are to the Tax Court
Rules of Practice and Procedure.1
The facts of this case have been submitted fully stipulated
under Rule 122 and are so found.
At the times of their deaths, decedents Duane B. Farnam and
Lois L. Farnam were residents of Otter Tail County, Minnesota.
At the time of filing the petition, decedents’ estates’ personal
representative resided in Fargo, North Dakota.
1 Although decedents died in different years--2001 and
2003--the relevant Code provisions for both years are in all
material respects the same.
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Last modified: March 27, 2008