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Held: The transfers of property to the
partnerships were not taxable gifts. See Estate of
Strangi v. Commissioner, 115 T.C. 478 (2000).
Held, further, sec. 2704(b), I.R.C., does not
apply to this transaction. See Kerr v. Commissioner,
113 T.C. 449 (1999).
Held, further, the value of D’s gift to his son
was 83.08-percent of the value of the underlying assets
of JBLP, reduced by a lack-of-marketability (8%)
discount. The value of D’s gift to each of his
daughters was 16.915 percent of the value of the
underlying assets of AVLP, reduced by secondary
market (40%) and lack-of-marketability (8%) discounts.
Held, further, the gifts of limited partnership
interests are not subject to additional lack-of-
marketability discounts for built-in capital gains.
Estate of Davis v. Commissioner, 110 T.C. 530 (1998),
distinguished.
William R. Cousins III, Robert Don Collier, Robert M.
Bolton, and Todd A. Kraft, for petitioner.
Deborah H. Delgado and Gerald L. Brantley, for respondent.
COHEN, Judge: Respondent determined a deficiency of
$4,412,527 in the 1995 Federal gift tax of W.W. Jones II. The
issues for decision are (alternatively): (1) Whether the
transfers of assets on formation of Jones Borregos Limited
Partnership (JBLP) and Alta Vista Limited Partnership (AVLP)
(collectively, “the partnerships”) were taxable gifts pursuant to
section 2512(b); (2) whether the period of limitations for
assessment of gift tax deficiency arising from gifts on formation
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