- 185 -
of other companies for inadequate consideration (i.e., fair
market value exceeded buy-sell formula price) to produce a lower
net deemed gift. Section 2512(b) provides:
SEC. 2512(b). Where property is transferred for less
than an adequate and full consideration in money or
money’s worth, then the amount by which the value of the
property exceeded the value of the consideration shall
be deemed a gift, and shall be included in computing the
amount of gifts made during the calendar year.
The language of the statute suggests that the gift amount is
reduced only by consideration received for the transferred
property that constitutes the gift. See Robinson v.
Commissioner, 75 T.C. 346, 351 (1980), affd. 675 F.2d 774 (5th
Cir. 1982). However, petitioners are in effect proposing that
sales of certain True companies for excessive consideration
served as consideration for sales of other True companies. The
facts do not support this proposition.
Each of the True companies was subject to a separate buy-
sell agreement. The parties could pick and choose which of the
companies they would sell and which they would retain. Each sale
was a separate, independent transaction. Accordingly, we see no
reason why consideration for the transfer of one interest should
serve as consideration for another separate transfer.
Third, with respect to estate tax, we are skeptical of
petitioners’ claim that book values exceeded fair market values
for interests in certain True companies owned by Dave True at his
death. We have said many times that a buy-sell agreement that
Page: Previous 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 NextLast modified: May 25, 2011