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determined that decedent had made taxable gifts to her children
amounting to $53,784 that are properly includable in decedent's
adjusted taxable gifts. Only $23,784 of that determination
remains at issue and encompasses two types of gifts: (1) Checks
of $10,000 delivered to each of decedent's three children and (2)
below-market-value rental of decedent's ranch properties. After
reducing the amount of the gifts by $10,000 to account for the
annual exclusion, respondent determined that decedent had made
taxable gifts to her children amounting to $5,595 in 1989,
$11,595 in 1990, and $6,594 in 1991.
The parties stipulated that decedent made the first type of
gifts. Respondent asserts that the information submitted by
petitioner’s expert on comparable rentals demonstrates that
decedent's rate of rent was less than the market rate.
Petitioner argues that decedent charged a market rate because
Coastal Ranches paid various property-related expenses. We agree
with respondent.
Petitioner's special use valuation report indicated that the
annual fair market rent of decedent's pro rata interest in the
parcels rented to Coastal Ranches was $14,725. The report did
not identify a fair market rent for parcel 3. Respondent
estimated that the annual fair market rent of decedent's 51-
percent interest in parcel 3's land and improvements (excluding
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