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The Kimball reports determined the so-called hypothetical
fair market value of the subject interests by ignoring the book
value buy-sell price, but otherwise regarding all other
provisions of the buy-sell agreements. Mr. Kimball factored the
buy-sell agreement terms into his determination of both entity
values and marketability discounts. This is a major flaw in
methodology that reduces the reliability of the conclusions of
the Kimball reports.
While we ignore buy-sell restrictions for valuation purposes
if they are deemed to be testamentary devices, we do not ignore
State law transfer restrictions. In determining the value of an
asset for transfer tax purposes, State law determines what
property is transferred. See Morgan v. Commissioner, 309 U.S.
78, 80 (1940); Estate of Bright v. United States, 658 F.2d 999,
1001 (5th Cir. 1981); Estate of Nowell v. Commissioner, T.C.
Memo. 1999-15. Under the Wyoming Uniform Partnership Act (WUPA),
a person may become a partner only with the consent of all
partners. See Wyo. Stat. Ann. sec. 17-21-401(j) (Michie 1999).68
A partner’s only transferable interest in the partnership is his
or her interest in distributions. See Wyo. Stat. Ann. sec. 17-
21-502(a) (Michie 1999). The transfer, in whole or in part, of a
partner’s transferable interest does not entitle the transferee
68All referenced sections of the Wyoming Uniform Partnership
Act (WUPA) were in effect at the time of the subject transfers in
1993 and 1994.
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