Estate of Mary D. Maggos - Page 12

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          appropriate “marketability discount” that should be applied to              
          the value of a 56.7-percent interest was 10 percent.  Petitioner            
          filed the Coopers & Lybrand report in the District Court                    
          litigation on or about December 10, 1996, in support of                     
          decedent’s assertion that her interest in PCAB was worth                    
          substantially in excess of what she received in the May 1, 1987,            
          redemption.  The District Court litigation was settled out of               
          court in early 1998.7                                                       
               In May 1987, decedent and PCAB entered into a redemption               
          transaction designed to minimize decedent’s estate and gift taxes           
          and to achieve decedent’s other testamentary goals.  The evidence           
          supporting this conclusion is explained more fully later in this            
               Respondent contends that PCAB redeemed decedent’s shares in            
          PCAB for less than their fair market value, resulting in Nikita             
          Maggos’ owning 100 percent of PCAB.  Respondent argues that this            
          transaction resulted in a gift to decedent’s son Nikita Maggos              
          that is subject to gift tax.  Respondent’s measure of the gift is           

               7Pursuant to the terms of the settlement, Nikita Maggos paid           
          $1,400,000 and conveyed an apartment in Honolulu, Hawaii, to the            
          Estate of Mary Maggos, and the Estate obtained a release from the           
          counterclaims asserted by Nikita Maggos.  Petitioner also                   
          obtained an indemnity from Nikita Maggos for any gift tax                   
          liability that might be due as a result of the May 1, 1987,                 

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