Estate of Lloyd P. Cavett - Page 11




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          Claims For Refund of Estate Taxes                                           
               Petitioners made the first claim for refund on June 25,                
          1996.  The basis for the claim is that $797,475.50 originally               
          reported as a bequest to Bell is properly to be reclassified as a           
          debt of the estate under a contract to make a will.  Petitioners            
          claim a reduction in estate tax from $212,438.06 to zero.                   
               Petitioners made the second claim for refund on July 22,               
          1996.  The basis for that claim is that (1) on account of a prior           
          gift, only one half of the value of decedent’s residence is                 
          properly includable in his gross estate ($200,000 rather than               
          $400,000), and (2) the estate incurred additional administrative            
          expenses of $138,327.86.2  Petitioners claim a reduction in                 
          estate tax of $80,984.70.                                                   
                                       OPINION                                        
          I.  Introduction                                                            
               During his life, Lloyd Cavett (decedent) made certain                  
          payments to Rose Bell (Bell and the Bell payments).  We must                
          decide whether the portion of the Bell payments determined by               
          respondent to be gifts (the Bell gifts) were gifts, as claimed by           
          respondent, or (in part) payments for services, as claimed by               
          petitioners.  We must also decide (1) whether certain bequests to           


               2    On brief, petitioners state their intention to abandon            
          the claim with respect to the additional administrative expenses.           
          Therefore, we resolve it against petitioners and will not address           
          it further.                                                                 





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