Baine P. and Mildred C. Kerr - Page 19




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          Tax Regs.   While accepting petitioners' concession regarding the           
          transfers to the Kerr children, counsel for respondent argued that          
          additional discovery was needed to determine the nature of the              
          property interests that petitioners transferred to the GRAT’s               
          trustees.  In response to these developments, the Court informed            
          the parties that it intended to define the property interests that          
          petitioners had transferred to the GRAT’s trustees, and decide the          
          legal question of the applicability of section 2704(b) before               
          conducting a trial on valuation issues.  In this regard, the Court          
          directed the parties to proceed with informal discovery, submit a           
          stipulation of facts to the Court, and prepare for a partial trial,         
          if necessary, on the issue of the nature of the property interests          
          that petitioners had transferred to the GRAT’s trustees.                    
               This matter was subsequently called for a partial trial in             
          Houston, Texas.  The parties filed a stipulation of facts, and the          
          Court received testimony from Eastland, petitioner, Mary Kerr               
          Winters, and James Robinson Kerr.  Following the aforementioned             
          hearings, the parties filed additional memoranda.                           

















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