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Deft is an S corporation that manufactures and sells
industrial coatings for military and commercial aircraft, heavy
duty trucks, and construction equipment. Deft also manufactures
and sells finishes and wood stains.
Deft, like other paint companies, is a hazardous waste
producer. From 1974 until 1991, Deft disposed of its hazardous
waste at three disposal sites. As a result of its waste
disposal, Deft faced large potential environmental liabilities.
On decedent's estate tax return, petitioner reported that
the fair market value of decedent's interest in Deft was
$6,160,576. This included a $2,306,250 reduction for Deft's
potential environmental liabilities. KPMG Peat Marwick (KPMG)
computed this figure for purposes of preparing the estate tax
return.
In addition to owning Deft stock, decedent also owned two
pieces of real property at his death. On the estate tax return,
petitioner reported that on the alternate valuation date the fair
market value of the Newport property was $800,000. On or about
May 6, 1994, the Newport property was sold for a net sales price
of $699,933.
On the estate tax return, petitioner reported that on the
alternate valuation date the fair market value of the Indian
Wells property was $280,000. On or about July 29, 1994, the
Indian Wells property was sold for a net sales price of
$267,782.
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Last modified: May 25, 2011