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interests in the subject property to the QTIP trust, it conveyed
no such beneficial interests. Accordingly, we conclude and hold
that on the date of decedent’s death, the QTIP trust held no
beneficial interest in the timber and pecan orchards on the
subject land. Consequently, petitioner appropriately excluded
the value of any such beneficial interests from decedent’s gross
estate.
Valuation Discount
The parties agree that on the date of decedent’s death, the
fair market value of the entire 5,354 acres of the subject
property, taken as a whole, in fee simple and without regard to
fractional interests, equitable claims of partners, or discounts,
and without including timber or pecan trees, was $1,746,795. In
reporting a $519,000 fair market value for the two undivided
interests in the subject property on decedent’s Federal estate
tax return, petitioner took an allocable percentage of the
$1,746,795 value and adjusted it downward by a 30-percent
discount.
Respondent concedes that if the “tax-motivated sham” is
disregarded, a fractional interest discount is appropriate. As
previously discussed, we decline to consider respondent’s
untimely sham argument. Accordingly, in determining the value of
decedent’s undivided interests in the South Property and the
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