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duplicate the first step; that is, to make joint transfers of
Sigco stock equal in value to $20,000 to each of decedent's
children and grandchildren. The third step in their scheme was
for certain of decedent's children to transfer the shares that
they had received to four of their siblings, including to Jay and
his children.2
The first step to transfer the Minn-Kota stock was for
George and his wife to make joint gifts of Minn-Kota stock valued
at $20,000 to each of their children and grandchildren in
December 1994 and January 1995. The second step was for decedent
and his wife to duplicate the first step; that is, to transfer in
each year $20,000 of Minn-Kota stock to George and his wife and
their children. The third step was for certain of George's
children and their spouses to transfer the stock in amounts equal
in value to $10,000 to Jody and his wife, Holly, and to their
children, George M. Schuler IV (George IV) and William.3
1994 Transfers of Sigco Stock
On December 28, 1994, in addition to transferring shares of
2Mr. Middaugh's notes with respect to this plan stated that
the "IRS could claim Step 3 is a step transaction - would be
highly likely if 1) there was a written agreement to do so, and
2) if it was done at the same time. Suggest it be voluntary and
at the end of 1995 at earliest." The third step had not been
executed at the time of trial.
3Mr. Middaugh made a note similar to the one in supra note 2
with respect to this step of the scheme. At the time of trial,
"Step 3" had not been executed.
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