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March 12, 1990, decedent and Fred Jr. executed a similar option
with respect to decedent’s interest in GMA. The estate also
accepted a cash payment in the amount of $10,000 from Fred Jr.
for decedent’s 50-percent interest in GMA.2
From 1985 through 1994, Fred Jr. was the defendant in an
equitable distribution suit brought by his former spouse, Jean H.
Godley. An Equitable Distribution Judgment was filed by the
District Court of Mecklenburg County, North Carolina, on
January 1, 1991. In the equitable distribution proceedings, the
nature of the foregoing option provisions was in issue, and
testimony was presented concerning the same. Also, depositions
were taken of Fred Jr. and decedent in connection with the
equitable distribution proceedings on the same issue. Fred Jr.
testified by deposition and at trial that the options “[were]
done for the purpose of circumventing inheritance taxes” and
“[were] a gift”. Decedent testified by deposition that the
options “would simplify at my death the closing of my estate, and
also would help establish to the government our worth whereby he
[i.e., Fred Jr.] could buy it * * * at a reasonable price”; and
in answer to the question whether the options “[were] a gift that
you made to him [i.e., Fred Jr.] at the time you signed the
2 Petitioner was unable to produce a copy of the
partnership agreement for GMA, but the testimony supports, and we
have found, that a similar option agreement existed in the case
of GMA.
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Last modified: May 25, 2011