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OPINION
I. Introduction
This case involves the value of certain gifts made in 1987
(the 1987 gifts) by Bonnie I. Barge (decedent) in trust for the
benefit of her 10 grandchildren. The 1987 gifts were of portions
of a 25-percent undivided interest in certain timberland (the
timberland). The parties agree that the question for decision by
the Court is the fair market value of the 25-percent undivided
interest in the timberland (the undivided interest) as of
February 6, 1987. Petitioner argues that the fair market value
of the undivided interest in February 1987 was between $4,200,000
and $4,888,600 and on February 6, 1987, it was $4,750,000.
Respondent argues that the fair market value of the undivided
interest on February 6, 1987, was at least $8,413,050. The
parties have stipulated that, as of the date of the 1987 gifts,
the fair market value of the timberland was $40 million.
The standard for determining fair market value for purposes
of the gift tax is the price at which the property would change
hands between a willing buyer and seller, neither being under any
compulsion to buy or sell, and both having knowledge of relevant
facts. Sec. 25.2512-1, Gift Tax Regs. Valuation is an issue of
fact, and petitioner bears the burden of proof. Rule 142(a). We
have found that the fair market value of the undivided interest
was $7,404,649 on February 6, 1987. We will explain our reasons
for making that finding.
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