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Shadle retained the services of a qualified real estate appraiser
in Yuma County and directed him to value the land as of August
29, 1989, because that was the effective date of the annuity
agreement. In his report, dated October 10, 1994, this appraiser
concluded that the land had a fair market value of $1,945,925 as
of August 29, 1989.
In the notice of deficiency dated March 13, 1996,
respondent, among other things, determined that decedent's
transfer of the land was a gift subject to gift tax. The March
13, 1996, notice of deficiency stated, in pertinent part:
Gift of Real Property in Yuma County, AZ
Your transfer of Yuma County, Arizona Real Property
with a value of $1,945,925 to Kimberly Ann Cullison,
Janet L. O'Mara, J. Gregory Cullison and Lori Ann
Cullison was a gift for Federal gift tax purposes.
Accordingly, your total gifts for 1989 are increased by
$1,945,925.[2]
Alternatively, if it is determined that your transfer
of the Yuma County, Arizona, real property was a bona
fide transfer in exchange for a private lifetime
annuity, then the excess of the fair market value of
the real property transferred over the present value of
the annuity constitutes a gift for Federal gift tax
purposes. The value of the gift is computed as
follows:
Fair Market Value of Yuma Co.
real property $1,945,925
Present Value of Private
lifetime annuity 1,360,724
Value of Gift 585,201
2 Respondent no longer contends that the entire transfer
was a gift. See infra note 3.
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