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question, Federal law applies to determine how the property
interest will be taxed. See United States v. Bess, 357 U.S. 51, 55
(1958).
The valuation standard under section 25.2512-1, Gift Tax
Regs., is objective--the standard is based on a purely hypothetical
willing buyer and willing seller, each of whom seeks to maximize
his or her profit from any transaction involving the property. See
Estate of Simplot v. Commissioner, 112 T.C. 130, 151-152 (1999),
and cases cited thereat. The hypothetical willing buyer and
willing seller are not specific individuals or entities, and their
characteristics are not necessarily the same as the personal
characteristics of the actual seller or a particular buyer. See
Estate of Bright v. United States, supra at 1005-1006; Estate of
Simplot v. Commissioner, supra at 152.
Petitioners attempt to expand section 25.2512-1, Gift Tax
Regs., beyond its intended scope by using the provision to redefine
the character of the property interests in question as assignee
interests. See, e.g., Estate of Nowell v. Commissioner, T.C. Memo.
1999-15. However, as explained above, we have already determined
that petitioners transferred limited partnership interests to the
GRAT’s trustees. Further, petitioners admit that they transferred
limited partnership interests to their children. Accordingly,
section 25.2512-1, Gift Tax Regs., is properly applied by
determining the price that a hypothetical willing buyer would pay
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