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Transfer of the Bank Stock to the Partnership
On September 9, 1991, petitioner transferred to the
partnership some of his stock in each of the three banks.7 The
parties have stipulated that the bank stock had a fair market
value at the time of transfer (prior to any consideration of any
partnership adjustment) as follows:
Stock No. of Shares Fair Market Value
Bank of Berry, AL 313 shares $186,633
Bank of Carbon Hill, AL 136 shares 279,140
Bank of Parrish, AL 262 shares 466,446
Total 932,219
Petitioner’s Gift Tax Return and Respondent’s Determination
Petitioner filed Form 709, United States Gift (and
Generation-Skipping Transfer) Tax Return, for calendar year 1991,
reporting gifts to John and William of interests in the leased
land and the bank stock. On the Form 709, petitioner valued the
leased land at $400,000. Petitioner listed the total appraised
value of the transferred bank stock as $932,219, less a 15-
percent minority discount, for a gift value of $792,386.
Petitioner reported a gift to John and William of $298,097 each
(25 percent of the total reported $400,000 value of the leased
land and $792,386 value of the transferred bank stock).
Petitioner reported no gift tax due on these transfers, the gift
7 Petitioner testified that he did not know what percentage
of his stock in the three banks he transferred to the partnership
in 1991 but that after the transfers he still owned a greater
than 50-percent interest in each bank.
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