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2The 1990 financial statement for Charlotte identifies
the current trust funds as the Principal and Interest Fund,
the Tax & Insurance Escrow, and the Depository Fund.
3The 1990 financial statement for Rocky Mount
identifies the current trust funds as the Principal and
Interest Fund, the Insurance and Tax Escrow Fund, and the
Surplus Fund.
Clinton was not financed by bond issuance and is not subject
to these same reserve requirements. However, Clinton was
financed by a loan issued by the Farmers Home Administration of
the U.S. Department of Agriculture, and the loan agreement
required a maintenance and replacements reserve, which as of
December 1989 contained $8,920.
OPINION
The issue in this case is the fair market value for Federal
estate tax purposes of decedent’s interests in the five
partnerships. Under the regulations, the value of property
includable in decedent’s gross estate is its fair market value at
the alternate valuation date with adjustments prescribed under
section 2032. See sec. 20.2031-1(b), Estate Tax Regs. Fair
market value is defined for these purposes as “the net amount
which a willing purchaser * * * would pay for the interest to a
willing seller, neither being under any compulsion to buy or to
sell and both having reasonable knowledge of relevant facts.”
Sec. 20.2031-3, Estate Tax Regs. Fair market value is determined
on the basis of the interest that passes at death. See Ahmanson
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