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O.E. Williams has continually managed the trust properties
since the 1970s, and it was expected that he would continue to do
so. O.E. Williams generally did not consult with his cotrustees
and/or family members in the management of the trust timberland.
His independent management was not necessarily in accord with the
best management practices.
Reported in John’s estate was his undivided one-half
community property interest in the 14/65 interest in the trust at
a value of $707,972, after applying a 25-percent
fractionalization discount. In an amended return for John’s
estate, a refund was claimed on the basis of an increased
fractionalization discount of 50 percent. Ultimately, a 60-
percent discount was claimed by John’s estate. The 14/65
interest after applying a 50-percent discount was returned at
$550,378. After applying a 60-percent discount the reported
amount would have been reduced to $504,610.37.
Sarah’s 17/65 interest was reported in her estate’s tax
return at a value of $665,686, after applying a 50-percent
fractionalization discount. In an amended return for Sarah’s
estate, a refund was claimed on the basis of a 60-percent
increased fractionalization discount, which resulted in a
reported value of $449,456.27.
Respondent determined that John’s 14/65 interest had a date
of death fair market value of $975,091. Respondent determined
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Last modified: May 25, 2011