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3. Did Jean True make gift loans when she transferred
interests in the True companies to her sons in exchange for
interest-free payments received approximately 90 days after the
effective date of the transfers (gift loan issue); and
4. Are petitioners liable for valuation understatement
penalties under section 6662(a), (g), and (h) (penalty issue)?
We hold in respondent’s favor that the buy-sell agreements
do not control estate and gift tax values. We value the subject
interests at amounts greater than the prices paid under the buy-
sell agreements and hold that understatement penalties apply to
parts of the resulting deficiencies. We hold for respondent on
the gift loan issue.
For convenience and clarity, findings of fact and opinion
are set forth separately under each issue. The findings of fact
regarding any issue incorporate, by this reference, the facts as
found with respect to any issue previously addressed.
Issue 1. Does Book Value Price Specified in Buy-Sell Agreements
Control Estate and Gift Tax Values of Subject Interests in True
Companies?
FINDINGS OF FACT
Some of the facts have been stipulated by the parties and
are so found. The stipulation of facts, supplemental stipulation
of facts, associated exhibits, and oral stipulations are
incorporated by this reference.
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Last modified: May 25, 2011