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David, all partnership income and income from other sources. She
did not maintain any records to account separately for
partnership and nonpartnership funds. Decedent utilized the
account as her personal checking account, and from this account
she paid personal and partnership expenses.
Decedent's executor filed Form 706 (United States Estate
(and Generation-Skipping Transfer) Tax Return) dated September
14, 1992. On that return, the estate did not include in the
gross estate the value of the 66 $10,000 limited partnership
interests decedent had assigned to family members. The estate
did, however, include the value of the remaining partnership
interests. The amounts included were based on advice from
competent tax professionals and a property appraisal company.
In the notice of deficiency issued to petitioner, respondent
determined a $947,049 deficiency and a $189,410 accuracy-related
penalty for negligence. The deficiency was based on respondent's
determination that the value of the assets contributed to the
partnerships was includable in decedent's gross estate. The
deficiency was also based on a determination that petitioner had
undervalued certain assets. The petition in this case was filed
on November 30, 1995.
OPINION
As a preliminary matter, the parties disagree as to whether
decedent owned, at the time the partnerships were funded, a
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