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partnership assets that were held by AVLP and JBLP were
$11,629,728 and $7,704,714, respectively. JBLP and AVLP had
bases in their assets of $562,840 and $1,818,708, respectively.
Attached to his 1995 Federal gift tax return, decedent
included a valuation report prepared by Charles L. Elliott, Jr.
(Elliott), who also testified as the estate’s expert at trial.
The partnerships were valued on the return and by Elliott at
trial using the NAV method on a “minority interest,
nonmarketable” basis. Nowhere in his report did Elliott purport
to be valuing assignee interests in the partnership. The
valuation report arrived at an NAV for the partnerships and then
applied secondary market, lack-of-marketability, and built-in
capital gains discounts. The expert report concluded that a
66-percent discount from NAV is applicable to the interest in
JBLP and that a 58-percent discount is applicable to the interest
in AVLP. On the return, decedent reported gifts of “an
83.08 percent limited partnership interest” in JBLP valued at
$2,176,864 and a “16.915 percent limited partnership interest” in
AVLP to each of his four daughters, valued at $821,413 per
interest.
In an affidavit executed on January 12, 1999, A.C. Jones
stated that the gifts that he and his sisters received from
decedent were “limited partnership interests”. The sole activity
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