- 40 -
employing Maloy’s methodology but substituting the pretax
equivalent of Lipscomb’s selected discount rate (12.3 percent),
we hold that at the time of petitioner’s gifts, the present value
of the reversion in the leased land was $190,291.26
E. Discounts for Fractional Interests
The parties have stipulated that if we were to measure
petitioner’s gifts by reference to the sons’ interests in the
partnership, the correct minority and marketability discount
would be 33.5 percent. We have determined, however, that
petitioner’s transfers represented separate, indirect gifts to
his sons of interests in the leased land and bank stock, rather
than gifts of partnership interests or enhancements thereto. As
previously discussed, the gift tax is imposed on the value of
what the donor transfers, not what the donee receives. See
Robinette v. Helvering, 318 U.S. at 186 (the gift tax is
“measured by the value of the property passing from the donor”);
25(...continued)
under a long-term timber lease would allow the land to lie fallow
for a number of years before the end of the lease, rather than
managing timber harvesting to maximize the timber’s growth
potential for the full duration of the lease.
26 On brief, petitioner–-agreeing wholly with none of his
several experts, but instead relying selectively on discrete
aspects of their several reports--urges that the 1991 value of
the reversion was only $30,024. In defense of this small number,
petitioner argues that “no one in their right mind is going to
pay anything in 1991 for a residual interest in the year 2023”.
Petitioner argues, among other things, that there may be a
reduced market for timber, because we may have a paperless
society by 2023. Maybe sooner, judging by the size of the record
in this case. Nevertheless, we are unpersuaded that a future fee
interest in more than 9,000 acres of Alabama timberland has
little or no value.
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