- 53 -
82.5 percent of these loan payments (approximately $1,340,000)
was the children's expenses.
As a result, petitioner's own accounting shows that the bank
accounts of Garry's estate were used to pay over $2.8 million of
the children's expenses during 1979-93. It also shows (as noted
above) that those bank accounts received over $443,000 of
decedent's funds that were not used to pay decedent's expenses.
For these reasons, petitioner's accounting strongly suggests that
large amounts of decedent's investment income were used to pay
the children's expenses during 1979-93.12
4. Decedent Did Not Receive Consideration Claimed by
Petitioner for Any Income Not Used To Pay Farm Expenses
Petitioner argues that, even if some of decedent's
investment income was not used to pay family farm expenses,
decedent did not make taxable gifts of that income. According to
petitioner, decedent received full consideration for any income
not spent on the farm, in the form of: (1) A $166,500 receivable
from HEI; and (2) the children's performance of substantial
services for the family farm.
With respect to the HEI receivable, we note that Garry's
estate tax return and petitioner's estate tax return each
12 Petitioner essentially admits on brief that the amount of
the children's expenses paid out of the three bank accounts of
Garry's estate exceeded the amount of the children's income
received by those accounts.
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