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By amended answer, respondent asserted an additional
deficiency of $150,178 in estate tax and an additional late
filing addition of $30,035.
Overview of Issues and Conclusions
Following concessions by the parties,2 the two issues for
decision are the "lifetime gifts" issue and the "unpaid mortgage"
issue.
The lifetime gifts issue concerns whether, during 1979-93,
Ona E. Hendrickson (decedent) made lifetime taxable gifts to her
children of $913,200 in coal royalties, dividends, and interest
received by the estate of her late husband. Petitioner asserts
that decedent made no such gifts. According to petitioner,
decedent made transfers of her share of the estate’s investment
income to a "family farm partnership" owned one-half by decedent
and one-half by the children. Petitioner argues that these
transfers were part of a bona fide, ongoing, ordinary business
transaction and therefore were not gifts, regardless of the
shortfall in the pecuniary consideration decedent received for
2 Because petitioner still contests much of the asserted
deficiency in estate tax, petitioner does not concede the amount
of the late filing addition determined by respondent. Petitioner
does concede, however, that the addition applies to any
deficiency we redetermine.
Respondent has conceded the allowance of the properly
substantiated expenses of this litigation as additional
administrative expenses of decedent's estate.
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Last modified: May 25, 2011