Maude G. Furman, Donor, Deceased, and Estate of Maude G. Furman, Deceased, Robert G. Furman, Executor - Page 14

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          had a fair market value of only $300,000 ($100 per share),5                 
          resulting in gifts by each of them to Robert of $240,540, before            
          allowance for the $3,000 annual exclusion.6                                 
               After concessions by Maude's estate, the remaining items at            
          issue in the Estate Tax Notice are respondent's determinations              
          that for purposes of the estate tax:  (i) The fair market value             
          on February 2, 1980, of the donative transfer of 6 shares of                
          FIC's common stock from Maude to Robert was $147,600, rather than           


               5 Respondent has not contested that the preferred shares of            
          FIC had a fair market value equal to their par value when                   
          received by decedents.  Valued at par, FIC's preferred shares,              
          with no participatory or residual rights beyond the stated                  
          dividend and par value, would yield 10 percent if dividends were            
          declared and paid in a timely fashion by the directors elected by           
          the holder(s) of the common stock of this small, closely held               
          corporation.  Inasmuch as the parties have stipulated that                  
          returns on a 20-year Treasury bond (risk-free rate) in 1980 and             
          1981 were 11.86 percent and 14.4 percent, respectively,                     
          respondent's acceptance of par as the value of the preferred                
          shares appears to be highly questionable.  In addition, the                 
          closely held character of FIC, the nonvoting characteristics of             
          the preferred, and the resulting inability of the preferred                 
          holders to compel the payment of dividends or bring about                   
          redemption of their preferred shares or liquidation of the                  
          company would have justified substantial minority and lack-of-              
          marketability discounts for the preferred.  Despite our                     
          misgivings, we decline to revalue the preferred shares on our own           
          motion.                                                                     
               6 See sec. 2503(b).  The Economic Recovery Tax Act of 1981,            
          Pub. L. 97-34, sec. 441(a), 95 Stat. 319, which does not apply in           
          this case, amended sec. 2503(b) by increasing the annual                    
          exclusion to $10,000, for transfers made after Dec. 31, 1981.               
               Respondent determined that Royal and Maude had made gifts of           
          $240,540 before allowance for the $3,000 annual exclusion.  Royal           
          was determined to have made a taxable gift of $237,540, while               
          Maude was determined to have made a taxable gift of $237,840.               
          This discrepancy appears to be the result of a computational                
          error by respondent.                                                        



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