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approximately $500,000 decrease in the value of decedent's
interest in the Gibson County coal rights (see supra p. 16).
With respect to the income generated by the assets,
petitioner does not dispute that decedent became entitled to
$913,200 of net investment income during 1979-93, which was not
included in decedent's estate. Petitioner admits that decedent's
income was transferred to a Hendrickson family "pool", in which
the children had an interest; petitioner also acknowledges that
intrafamily transactions are generally presumed to be gifts.
Notwithstanding all this, petitioner still maintains that
decedent did not make any of the taxable gifts determined by
respondent.
Petitioner's position, unlike respondent's, focuses on
decedent's asserted motivation for her use of the investment
income. As set forth in more detail below, petitioner argues
that decedent did not intend to make any gifts, and that she
either invested or spent most or all of her income to preserve
the family farm. Petitioner additionally argues that, if any of
decedent's income was not in fact spent on the family farm,
decedent received full consideration for that income in money or
money's worth, in the form of a receivable from HEI and the
children's provision of services to the farm.
In this context, petitioner notes that Garry's family had
lived in Warrick County, Indiana, since 1853 and that decedent
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