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On September 22, 1991, Decedent died leaving her 20-percent
interest in the Partnership in trust. In connection therewith,
her will stated:
My said executrix and trustee is hereby given full
authority and power * * * to continue and carry on any
business in which I am engaged at the time of my death,
including the continuation of any partnership in which
I may be interested at the time of my death,
particularly the partnership with my said brother, J.S.
Meldrim, and that to facilitate the uninterrupted
continuance of said partnership operation, my said
executrix and trustee is hereby designated a
substituted partner in said partnership, if deemed
desirable by said executrix and trustee, for and during
the administration of my estate and said trust; * * *
When Decedent died, the Partnership owned 5,501 acres of
land and timber in St. John's County, Florida, along with other
assets. On petitioner's Form 706, United States Estate Tax
Return, Personal Representative reported that the fair market
value of Decedent's 20-percent interest in the partnership
equaled $533,895. Upon audit, respondent determined that the
fair market value was $1,147,177. Respondent valued the
20-percent interest by: (1) Valuing the Partnership's land and
timber by reference to comparable sales, (2) adding 20 percent of
this value to 20 percent of the fair market value of the other
assets of the partnership as reported on Form 706, (3) applying a
10-percent discount to take into account Decedent's fractional
interest in the Partnership, and (4) applying a 15-percent
discount to reflect other factors such as the lack of
marketability.
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Last modified: May 25, 2011