- 21 - 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 valuePage: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: May 25, 2011