Estate of Catherine E. Dowell, Deceased, Patricia Low, Executrix - Page 2

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               Catherine E. Dowell (sometimes referred to as decedent or              
          mother) owned 75 percent of the stock of Dowell Insurance Agency,           
          Inc. (the stock or agency stock; the agency), at the time of her            
          death.  Decedent had previously sold 25 percent of the agency               
          stock to her daughter, Patricia Low (sometimes referred to as               
          daughter), and was receiving monthly installment payments from              
          the sale.  The obligation to make the installment payments1 (the            
          debt) was forgiven by decedent on her deathbed.  Decedent's Last            
          Will and Testament (the will) bequeathed her remaining stock to             
          her daughter "with the understanding" that she would make monthly           
          payments of $5,000 to decedent's son for 10 years.  A codicil to            
          decedent's will stated that monthly payments were to be made by             
          the daughter to decedent's husband instead.  After her mother's             
          death, Patricia Low never made any of the monthly payments.                 
          Decedent's husband was the residuary beneficiary under decedent's           
          will.  Petitioner, decedent's estate, computed the sum of the               
          monthly payments called for in the codicil to be $450,000, and              
          claimed that amount as a marital deduction on its Federal estate            
          tax return.  After concessions, the issues for decision are:                
               (1) Whether decedent's husband inherited her agency stock on           
          the failure of the daughter to make the payments called for in              
          the codicil; if decedent's husband did not inherit the agency               
          stock,                                                                      

               1  The record does not show that an installment note was               
          entered into by the daughter.                                               




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Last modified: May 25, 2011