Estate of Cyril I. Magnin, Deceased, Donald Isaac Magnin, Executor - Page 15

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          children in performance of his October 31, 1951,8 agreement with            
          Joseph.                                                                     
               On May 25, 1971, Cyril created three trusts, one for each of           
          his three children.  He transferred, inter alia, the proceeds of            
          the JM stock that had been sold in a 1969 buyout of all JM stock            
          by Amfac, Inc.  Under the terms of each trust, Cyril retained an            
          income interest for his life, and upon Cyril's death, the trust             
          was to terminate, and the principal and undistributed income were           
          to be distributed to the beneficiary.                                       
               For the calendar quarter ending June 30, 1971, Cyril filed a           
          gift tax return.  In an attachment entitled "Statement Describing           
          Incomplete Gifts", Cyril reported the creation of the three                 
          trusts, stating that they were created "pursuant to pre-existing            
          agreements between * * * [himself] and his father" and explaining           
          that the transfers were not completed gifts.  The IRS accepted              
          the gift tax return as filed.                                               

          Facts Related to Value of JM and Specialty                                  

               JM originally operated one location in downtown San                    
          Francisco.  In 1928, a second store was opened in Palo Alto,                
          California, and three other stores were opened between 1943 and             
          1950--one in San Mateo and two in Sacramento, California.  JM did           

          8We note that the actual language in both Cyril's 1955 and                  
          1965 wills referred to an Oct. 5, 1951, agreement.  However,                
          respondent conceded, and we agree, that Cyril meant to refer to             
          the Oct. 31, 1951, agreement.                                               




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