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annual exclusion from taxable gifts provided by section 2503(b)
to make a series of annual gifts with a fair market value of
$10,000 to each of her three children. After a discussion with
her children, decedent agreed to transfer to each child, and each
child agreed to accept, one-ninth of her interest in the
Weinstock Residence in 1984, 1985, and 1986 (a transfer of one-
ninth of her interest each year to each child).
In August 1984, due to an error in drafting the conveyance,
decedent transferred by deed her entire interest in the Weinstock
Residence to her three children. That is, decedent transferred
nine-ninths of her interest, described in the deed as an interest
in fee simple, instead of the three-ninths she intended to
transfer. Unaware of the error, the transferees recorded this
deed on January 22, 1985. Decedent executed deeds in 1985 and
1986 that purported in each of those years to convey an
additional one-ninth of her interest to each child. The 1985 and
1986 deeds were not recorded by the children-transferees.
The Sale of the Weinstock Property
In May 1987, all of the parties owning interests in the
Weinstock Property entered into an agreement to sell the entire
Weinstock Property to a potential buyer (Purchaser). At the time
of the agreement, the owners of the 28.75-acre portion, and their
ownership percentages, were as follows: the Carolyn Trust, 32.5
percent, the Nathan Trust, 32.5 percent, decedent, 17.5 percent,
and Mrs. Nathan, 17.5 percent. The remaining acreage was owned
by decedent, individually, Mrs. Nathan, individually, and the JKH
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