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Unless otherwise indicated, all section references are to
the Internal Revenue Code as in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated by this reference. Petitioner resided in Elgin,
Illinois, at the time the petition was filed.
Illinois Hydraulic Construction Co. (IHC) has been owned by
the Rakow family since 1970. During 1992, IHC had outstanding
6,340 shares of common stock and no preferred stock. On
October 1, 1992, petitioner gave a total of 1,780 shares of IHC
common stock to her children and grandchildren. Petitioner
reported the gifts of the 1,780 shares of IHC stock on a 1992
Form 709, United States Gift (and Generation-Skipping Transfer)
Tax Return. Petitioner’s 1992 gift tax return valued the 6,340
shares of IHC common stock at $2,250,000, or $354.89 per share,
on a minority basis. Respondent determined the value of the
6,340 shares of IHC to be $3,846,161, or $606.65 per share, on a
minority basis.
IHC is a general contractor engaged in the construction of
industrial and commercial buildings, sewage and water treatment
plants, and underground utilities, primarily in Northern
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