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2. Whether, as petitioners contend, the fair market value
of petitioners’ gifts is the value of the assets in the
partnership reduced by portfolio, minority interest, and lack of
marketability discounts totaling 44 percent. We hold that
discounts totaling 15 percent apply.
3. Whether the fair market value of each of petitioners’
gifts to each children’s trust on December 28, 1994, is $263,165
as petitioners contend, $450,086 as respondent contends, or some
other amount. We hold that it is $394,515.
4. Whether section 2704(b) applies. We hold that it does
not.
Unless otherwise indicated, section references are to the
Internal Revenue Code. Rule references are to the Tax Court
Rules of Practice and Procedure. References to petitioner are to
Herbert D. Knight. References to Mrs. Knight are to petitioner
Ina F. Knight.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
1. Petitioners’ Family
Petitioners were married and lived in San Antonio, Texas,
when they filed their petitions and at the time of trial. They
have two adult children, Mary Faye Knight (Mary Knight) and
Douglas Dale Knight (Douglas Knight). Petitioners’ children were
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