Estate of Robert V. Schuler - Page 4




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          Jody.                                                                       
               Sigco Sunplant, Inc.                                                   
               In 1970, decedent, George, and their mother, Dorothy, formed           
          Sigco Sunplant, Inc. (Sigco).  Sigco is engaged in the sunflower            
          seed business.  Upon Dorothy's demise, Sigco was owned equally by           
          decedent and his brother.                                                   
          The Plan and the Stock Transfers                                            
               Decedent had heart disease, had undergone heart bypass                 
          surgery, and had suffered seven heart attacks, most of them                 
          before the transfers at issue.  Decedent had seven children, his            
          brother has six children, and many of both men's children have              
          children.  In discussions with their insurance agent, Dave                  
          Middaugh (Mr. Middaugh), decedent and his brother made it clear             
          that they wanted their families to succeed them in the                      
          businesses, and that they wanted decedent's family to control               
          Sigco and George's family to control Minn-Kota.                             
               After many discussions, decedent, his brother, and Mr.                 
          Middaugh devised a three-step plan to transfer divided ownership            
          of Sigma and Minn-Kota to each other's family and to use section            
          2503(b) to save estate taxes.                                               
               The first step to transfer the Sigco stock was for decedent            
          and his wife to make joint gifts of Sigco stock equal to $20,000            
          of value to their children and grandchildren during December 1994           
          and January 1995.  The second step was for George and his wife to           






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