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ending December 31, 1988. Respondent further determined a
deficiency in decedent's estate's Federal estate taxes in the
amount of $1,257,057.
After concessions the sole issue for decision is whether
decedent's estate may claim as a deduction from the gross estate
certain interest expenses under section 2053(a)(2). Unless
otherwise indicated, all section references are to the Internal
Revenue Code in effect at the time of decedent's death, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
Background
This case was submitted fully stipulated pursuant to Rule
122. The stipulation of facts and the attached exhibits are
incorporated by this reference, and the facts contained therein
are found accordingly. Decedent died on June 25, 1989.
Decedent’s residence was in Ooltewah, Tennessee in Hamilton
County, Tennessee, on the date of her death. Decedent’s two
sons, R. Ellsworth McKee and Jack C. McKee, are the executors of
her estate. Decedent and O.D. McKee (decedent’s surviving
spouse) were married at all times relevant hereto.
In 1954, decedent and decedent's spouse acquired McKee Foods
Corporation (formally known as McKee Baking Co.) (the Company), a
closely held corporation that sells snack foods nationally under
the "Little Debbie" trade name. The Company holds a significant
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