Estate of Elma Middleton Dailey, Deceased, Donor, K. Robert Dailey, II, Executor - Page 6




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          percent limited partnership interest transferred to Mr. Dailey              
          had gift tax consequences at formation or funding.                          
               Both parties agree that the given and retained interests               
          were, on December 8, 1992, and January 10, 1997, worth their                
          proportionate share of the NAV of $1,267,619 and $1,047,603 for             
          gift and estate tax purposes, respectively.  They disagree,                 
          however, about the size of the minority and marketability                   
          discounts.  Both parties’ experts compared the FLP to closed-end            
          mutual funds, which trade at a discount to NAV, but disagreed on            
          the amounts of the discounts.  Petitioners’ expert, citing                  
          published data, opined that the aggregate discount is 40 percent            
          for lack of marketability, control, and liquidity and testified             
          that he considered the significant amount of unrealized capital             
          gains relating to the Exxon stock.                                          
               Respondent’s expert, on the other hand, relied in part on an           
          unpublished study that he coauthored and, in a revised report               
          submitted at trial, increased the marketability discount                    
          purportedly substantiated by his unpublished study from 12.5                
          percent to 14.1 percent.  Respondent’s expert opined that an                
          aggregate discount of 15.72 percent on December 8, 1992, and                
          13.51 percent on January 10, 1997, should be applied.  At trial,            
          respondent’s expert testified that he could not recall reviewing            
          the Agreement and, although he believed that unrealized capital             
          gains are “an important source of discounts”, he did not review             






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