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gift tax, after taking account of the annual exclusion provided
by section 2503(b) and the gift-splitting provisions of section
2513(a)(1).
In an undated letter that petitioner wrote to Stephen, and
that Stephen signed on February 6, 1987 (February 1987 letter to
Stephen), petitioner summarized the amounts that she considered
paid as of January 3, 1986, with respect to the $50,000 check
that she had issued to him on June 18, 1982, as follows:9
Aug. 5, 1983 $2,500
Jan. 22, 1984 7,500
Mar. 31, 1985 7,500
Jan. 3, 1986 7,500
Petitioner made no reference in the February 1987 letter to
Stephen to the $50,000 check that she had issued to him on
September 9, 1982. Petitioner omitted from that letter the
$5,000 amount forgiven that was stated in her forgiveness letter
dated December 20, 1982. Nor did that letter refer to any
portion of the $15,000 payment that Stephen had made to her on
November 29, 1982. Stephen reviewed that letter prior to signing
it. However, he did not notice, or question the reasons for,
those omissions.
PKF recorded a $15,000 credit and a $10,000 credit to the
"Notes Receivable--S. Miller" account in petitioner's general
9 In determining the amounts petitioner considered paid by
Stephen as of Jan. 3, 1986, she applied one-half of each amount
forgiven that was stated in each of the forgiveness letters for
the years 1983, 1984, 1985, and 1986 to the $50,000 check that
she had issued to him on June 18, 1982.
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