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her preferred stock. On September 1, 1987, when Decedent was
80 years old, she and Vaparo agreed that Vaparo would buy the
remainder interest in these 470 shares. Under the agreement,
Decedent sold Vaparo the remainder interest and retained the
income interest in the shares for life.3 The remainder interest
in the shares was worth $1,324,014 at the time of sale, and the
total value of the shares was $2,350,000.4 Decedent received a
private annuity worth $1,324,014, in consideration for the sale.
Decedent died on May 25, 1990, after receiving annuity
payments totaling $592,078. Decedent never sold, relinquished,
or otherwise disposed of her income interest. Respondent
3 Decedent reported $23,500 in dividends from Vaparo on her
1987 Federal income tax return. For her 1988 through 1990
taxable years, Vaparo did not declare any dividends, and Decedent
did not report any dividend income from Vaparo.
4 The parties determined the value of the remainder interest
in Decedent's preferred shares by multiplying the shares' fair
market value by the appropriate remainder factor contained in the
actuarial tables under sec. 20.2031, Estate Tax Regs. As
stipulated by the parties: "The parties agree that this is a
correct valuation of the remainder interest in the preferred
stock." In view of this stipulation, we need not and do not
consider the value of Decedent's preferred shares from a factual
viewpoint, including the related question of whether Decedent's
reserved life estate in a noncumulative preferred stock from
which she received no dividends following the transaction at
issue actually had value. Cf. Berzon v. Commissioner, 63 T.C.
601, 618-620 (1975), affd. 534 F.2d 528 (2d Cir. 1976). The
actuarial tables are presumptively correct, and the record that
the parties agreed to does not require the conclusion that
Decedent's use of the tables is "unrealistic and unreasonable" as
in Froh v. Commissioner, 100 T.C. 1,4 (1993), affd. without
published opinion 46 F.3d 1141 (9th Cir. 1995).
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