- 3 - Background The material facts in these cases are not in dispute. During 1991 and 1992, Frank Armstrong, Jr. (decedent), transferred a substantial amount of stock in National Fruit Product Co., Inc., to his children and grandchildren, including Frank Armstrong III, JoAnne Armstrong-Jones, Gretchen A. Redmond, and William Armstrong (hereinafter petitioners). Decedent was nearly insolvent after paying $4,680,283 in Federal gift taxes attributable to the stock transfers. Decedent died on July 29, 1993--within 3 years of the aforementioned transfers. Respondent subsequently issued a notice of deficiency to the Estate of Frank Armstrong (the Armstrong estate) determining a deficiency in estate tax of $2,350,071. The deficiency is attributable to respondent's determination that the estate failed to include in the gross estate the gift taxes that decedent had paid on the above-described transfers as required under the so- called gross-up rule prescribed in section 2035(c).3 The estate 3 Sec. 2035(c) provides in pertinent part: (c) Inclusion of Gift Tax on Certain Gifts Made During 3 Years Before Decedent's Death.--The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse after December 31, 1976, and during the 3-year period ending on the date of the decedent's death. (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011