- 19 -
tax return.8 Petitioners do not include in this amount the
$333,595 of income from Trust B assets, such as interest and
dividends. Thus, added to the $220,823, Trust B had a liquid
reserve of $554,418 by the end of 1992.
Petitioners contend that Trust B needed a reserve for taxes
of at least $749,696, the total of the deficiencies determined in
the notices of deficiency. We disagree. The deficiency arose
because respondent determined that the value of Ripplestone was
more than reported by petitioners. However, when they received
the notices of deficiency, petitioners knew that Ripplestone was
worth less than its reported value because of ground
contamination and zoning problems.
Apparently, when the estate filed the return, the executor
did not know of those problems or that the fair market value of
Ripplestone was less than the value reported on the estate tax
return. Petitioners will receive a refund from respondent due to
the reduced fair market value of Ripplestone regardless of our
decision here.
8 Petitioners computed this amount by subtracting $362,106
(alleged by petitioners to be additional Ohio estate tax payable)
and $291,363 (administration expenses deducted on the return but
not yet paid) from $874,292, which was the fair market value of
Trust B's cash and cash equivalents on June 29, 1990. There is
no evidence of the value of Trust B's cash and cash equivalents
on Mar. 16, 1990, when the estate filed the estate tax return.
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