Ina F. Knight - Page 22




                                        - 22 -                                          
               We conclude that Conklin was acting as an advocate and that              
          his testimony was not objective.  However, despite the flaws in               
          petitioners’ expert’s testimony, we believe that some discount is             
          proper, in part to take into account material in the record                   
          relating to closed-end bond funds.  We hold that the fair market              
          value of an interest in the Knight family partnership is the pro              
          rata net asset value of the partnership less a discount totaling              
          15 percent for minority interest and lack of marketability.                   
          Thus, on December 28, 1994, each petitioner made taxable gifts of             
          $789,030 (44.6 percent of $2,081,323, reduced by 15 percent).                 
          E.   Whether Section 2704(b) Applies                                          
               Respondent contends that Article 14 (the 50-year term or                 
          dissolution by agreement of all partners) and Article 9 (the lack             
          of withdrawal rights for limited partners) of the partnership                 
          agreement are applicable restrictions under section 2704(b)                   
          because sections 8.01 and 6.03 of Texas Revised Limited                       
          Partnership Act (TRLPA), Tex. Rev. Civ. Stat. Ann. art. 6132a-1               
          (West Supp. 1993), are less restrictive.  We disagree.  See Kerr              
          v. Commissioner, 113 T.C. 449 (1999).                                         
               If a transferor conveys to a family member an interest in a              
          partnership or a corporation which is subject to an “applicable               
          restriction”, and the transferor and transferor's family members              
          control the entity immediately before the transfer, the                       
          restriction in valuing the interest shall be disregarded.  See                






Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011