T.C. Memo. 1999-254
UNITED STATES TAX COURT
WALTER L. GROSS, JR., AND BARBARA H. GROSS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
CALVIN C. LINNEMANN AND PATRICIA G. LINNEMANN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 4460-97, 4469-97. Filed July 29, 1999.
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Ps made gifts to their children of shares in
S corporation, which, annually, distributed
substantially all of its income. R determined gift tax
deficiencies based on adjustments increasing the fair
market value of the shares. Principal differences
between the parties are (1) whether to “tax affect”
corporation’s earnings in determining discounted cash-
flow, (2) the discount for lack of marketability, and
(3) the cost of equity.
Held: Value of shares determined; marketability
discount and cost of equity determined; tax affecting
inappropriate under facts presented.
James J. Ryan and Gerald J. Rapien, for petitioners.
Robin Herrell and Matthew Fritz, for respondent.
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