Estate of Pattie Welder Edwards - Page 15

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          the oral options did not exist for the purpose of estate tax                
          valuation, we need not address the parties’ arguments regarding             
          the validity and enforceability of the alleged oral options under           
          Texas law or the impact of section 2703.                                    
               Decedent did not grant oral options prior to her death, and            
          the postdeath leases were executed subsequent to decedent’s                 
          death.  The postdeath leases do not justify a discount on the               
          ranch properties because the postdeath leases were not an                   
          encumbrance that existed at the moment of decedent’s death.  Cf.            
          Estate of Proctor v. Commissioner, T.C. Memo. 1994-208.                     
               Respondent argues that the existing leases must also be                
          disregarded in determining the value of the properties on                   
          decedent’s date of death under section 2703(a)(2).  We need not             
          address this argument because:  (1) The estate does not identify            
          the amount of the discount attributable to the existing leases on           
          the ranch properties when valuing the ranch properties on its               
          Form 706, (2) the various experts’ reports do not place a                   
          separate value on the discount created by the existing leases,              
          and (3) the estate maintains the position that the oral options             
          were granted prior to decedent’s death and supersede the existing           
          leases.  Thus there is no evidence that any discount is                     
          attributable to the existing leases.  The unencumbered fair                 
          market values of the ranch properties at decedent’s date of death           

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