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v. Commissioner, 235 F.2d 149 (9th Cir. 1956); Ketteman Trust v.
Commissioner, 86 T.C. 91 (1986). In each of these cases,
property was transferred to a corporation for less than full
consideration. All or part of the stock of the transferee
corporations was owned by persons other than the transferor. In
each case, the value of the gift was found to be the fair market
value of the property transferred to the corporation, minus any
consideration received by the transferor. None of these cases
allowed a discount based upon a hypothetical assumption that
fractionalized interests in the transferred property were given
to the individual shareholders of the transferee corporations.
Unfortunately, the majority does not follow its own formula, as
quoted above, or the above-cited cases.
The only case cited by the majority where a discount was
given based on a hypothetical assumption that fractionalized
interests in the transferred property were given to the indirect
beneficiaries (shareholders or partners) is Estate of Bosca v.
Commissioner, T.C. Memo. 1998-251. I believe that Estate of
Bosca was incorrectly decided on this point. That opinion
improperly relied upon cases that dealt with determining the
number of annual gift tax exclusions and blockage discounts.
Opinions dealing with the number of annual gift tax
exclusions under section 2503(b)3 have no application in
3Sec. 2503(b) provides in part:
SEC. 2503(b). Exclusions From Gifts.--In the case
(continued...)
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