Richard D. Hohenstein - Page 4

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          estate was entitled to, and properly received, a special                    
          valuation for the farm under section 2032A.                                 
               Petitioner farmed the Nicollet farm for almost 8 years, from           
          the time of his father's death until early 1991.  Respondent does           
          not dispute that petitioner materially participated in farming              
          the subject property during this period.  On November 27, 1990,             
          Hohenstein suffered an injury to his back, which necessitated               
          surgery.  Due to the injury, he can no longer perform the                   
          physical labor associated with farming.                                     
               As a result of petitioner's physical incapacity, on March              
          21, 1991,1 he sold a 75-acre parcel of the Nicollet farm to an              
          unrelated party.  Shortly thereafter, he filed a Form 706-A,                
          United States Additional Estate Tax Return, reporting the                   
          disposition and paying the recapture tax due of $27,122.                    
               On March 31, 1991, petitioner entered into two separate cash           
          leases with nonfamily members for the two parcels constituting              
          the balance of the Nicollet farm (the subject property in the               
          instant case).                                                              
               The initial lease for the first parcel (consisting of                  
          approximately 105 acres) agreed to a 1-year term for the sum of             
          $11,844, payable in a single installment due on or before April             
          15, 1991.  The lease for the second parcel (comprising                      


               1    Although the parties stipulate that the date was March            
          31, 1991, the Schedule A attached to the Form 706-A states the              
          date of disposition was March 21, 1991.                                     




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