Jewell E. Gray, Donor, Deceased and Estate of Jewell E. Gray, Deceased, Jewell Mae Detjen, Personal Representative, et al. - Page 11

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          the transfer of the 1,004 shares was a taxable gift which had a             
          total value of $595,090.88.                                                 
               Irrevocable trust #3 transferred 134 shares of Beth W. Corp.           
          stock to Beth W. Corp. on March 19, 1988, and 108 shares on July            
          31, 1989.  Irrevocable trust #3 treated the transfers as a                  
          redemption and reported the amount received in exchange as                  
          taxable dividends on its income tax returns.                                
               Petitioner and the trusts recorded the dividends and                   
          redemptions on their books and records.  Petitioner recorded the            
          redemptions on duly executed stock certificates.  Petitioner                
          reported the dividends and redemptions on its income tax returns.           
          D.   Land Sale                                                              
               Beth W. Corp. sold 55.91 acres of unimproved, non-income               
          producing land to irrevocable trusts #2 and #3 on March 19, 1987,           
          for $2,265,000.  The parties obtained two appraisals before the             
          sale.  The average value of the two appraisals was $1,882,000.              
               The trusts paid for the 55.91 acres with a promissory note             
          for $2,265,000 secured by the 55.91 acres and a $500,000                    
          mortgage.  The note required the trustees to pay interest at a              
          rate of 6.15 percent per year.  The principal was due on March              
          19, 1990.  The mortgage provided that Beth W. Corp. could                   
          foreclose on the trusts in the event of default.                            
               Beth W. Corp. reported the sale of the 55.91 acres on its              
          Federal income tax return for its taxable year ending July 31,              

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