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capital gains) if on that date each such asset had been sold or
otherwise disposed of or ADDI&C had liquidated.
During 1990, ADDI&C paid $252,602 to an affiliated company as
reimbursement for the use of an airplane by one of its
shareholders. For Federal income tax purposes, ADDI&C reported
that payment as a shareholder dividend. With the exception of
that dividend, ADDI&C has not declared or paid any dividends to
its shareholders.
On the valuation date, ADDI&C had not adopted a formal plan
of liquidation, nor was there any intention by that corporation or
decedent to liquidate ADDI&C or to dispose of its Winn-Dixie
stock.
On October 31, 1992, ADDI&C's net operating loss carry-
forwards totaled $1,580,217.
On or about April 15, 1993, decedent timely filed for 1992
Form 709, United States Gift (and Generation-Skipping Transfer)
Tax Return (gift tax return). In that return, decedent reported
that the value on the valuation date of each of the two 25-share
blocks of ADDI&C stock that he transferred to his sons was
$7,444,250, or $297,770 a share. The value reported by decedent
in the gift tax return was based on an appraisal by Alex W. Howard
(Mr. Howard) of Howard Frazier Barker Elliott, Inc. (Mr. Howard's
appraisal).
Respondent determined in the notice of deficiency (notice)
that on the valuation date the fair market value of each of the
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