30
Sometime from December 22, 1990, to January 2, 1991, Mike
and Peter Brown gave Paul Brown promissory notes for $126,412.50
and $166,412.50, respectively, as partial consideration for the
Brown family partnership units. Both notes were paid in full,
with interest, in January 1991.
On January 2, 1991, Paul Brown forgave $20,000 of each of
the debts incurred by Mike and Peter Brown.
The partnership was later dissolved. Its assets (the Sawyer
note and option) were distributed to the partners, pro rata,
according to partnership units held.
2. Paul Brown's Gifts of Partnership Interests and
Forgiveness of Related Debt
Paul Brown and his wife, Mary Brown, filed Federal gift tax
returns (Forms 709) for the tax years 1983 to 1986, 1990, and
1991. They used the annual per donee exclusions from gifts
(section 2503), and the gift splitting provisions (section 2513)
in each of those years, and the unified credit (section 2010) in
1983-86.
On their Forms 709 for 1984, 1985, and 1986, Paul and Mary
Brown reported that the donor's adjusted basis was zero for all
gifts.
Paul Brown reported making the following gifts in 1983-86
and 1990-91:
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