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common stock of SCC, representing 16.09 percent of the
outstanding common stock. Decedent also owned 770 of the 3,480
outstanding shares of common stock of WLI, constituting a 22.13-
percent interest in WLI. As of the valuation date, WLI was an S
corporation whose principal business was the development and sale
of home sites and improved acreage within the Walden Lake
Development, located in Plant City, Florida. WLI had the
following net earnings for the years 1990 through 1993:
Year Net Earnings
1990 $1,682,795
1991 455,706
1992 1,025,958
1993 423,769
For the years 1990, 1991, 1992, and 1993, financial statements
with independent auditor’s reports were prepared on behalf of
WLI, SCC, and other affiliated companies sharing common
ownership. For the years 1990 through 1992, separate audits were
made of WLI. For 1993, the audit combined the activities of WLI
with SCC and other affiliated companies sharing common ownership.
For the years 1991, 1992, and 1993, the earnings of WLI included
profits from intercompany transactions with SCC and the
affiliates.
OPINION
The Internal Revenue Code imposes a Federal estate tax on
the transfer of the taxable estate of a decedent who is a citizen
or resident of the United States. See secs. 2001 and 2002. The
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