Estate of Marcia P. Hoffman, deceased, Elisabeth Hoffman, Personal Representative - Page 21




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               The parties dispute the value of:  (1) Two promissory notes,           
          (2) decedent’s 27.5-percent interest in Clubside, and (3)                   
          decedent’s stock interest in WLI.                                           
               1.  Value of Clubside Promissory Notes                                 
               The parties dispute the value of two promissory notes of               
          Clubside, one payable to decedent and the other payable to                  
          Hoffman Associates (of which decedent owned 100 percent of the              
          outstanding stock).                                                         
               For estate tax purposes, “the fair market value of notes,              
          secured or unsecured, is presumed to be the amount of unpaid                
          principal, plus interest accrued to the date of death, unless the           
          executor establishes that the value is lower or that the notes              
          are worthless.”  Sec. 20.2031-4, Estate Tax Regs.  The burden of            
          proof is on the taxpayer to submit satisfactory evidence that the           
          note is worth less than the face value plus accrued interest                
          (e.g., because of the date of maturity, interest rate, or other             
          cause).  See Estate of Pittard v. Commissioner, 69 T.C. 391, 399            
          (1977); Estate of Berkman v. Commissioner, T.C. Memo. 1979-46;              
          sec. 20.2031-4, Estate Tax Regs.  In the instant case, both                 
          parties departed from the presumed fair market value and                    
          discounted the promissory notes from the date of maturity to the            
          valuation date.                                                             
               Respondent relies on the report and testimony of his expert            
          appraiser, Mark Mitchell (Mr. Mitchell), to determine the value             






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Last modified: May 25, 2011