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Respondent determined in the gift tax statutory notice to
Jean True that this deferred payment arrangement was a “below-
market gift loan” subject to section 7872, which gave rise to a
taxable gift from Jean True to her sons, in the amount of
$192,307. Petitioners dispute this determination.
FINDINGS OF FACT
In 1994, Jean True sold her interests in 22 True companies
to her sons.81 Five of the companies were partnerships, one was
a limited liability company (LLC), and 16 were corporations. All
the corporations were S corporations, except for Midland
Financial Corp., which was a C corporation.
Substantially identical buy-sell agreements governed
transfers of interests in these companies. The buy-sell
agreements were contained in partnership agreements (partnership
buy-sell agreements) and in stockholders’ restrictive agreements
(corporate buy-sell agreements).
The buy-sell agreements were triggered when Jean True gave
her sons notice of her intention to sell her interests. Jean
True gave notice of her intention to sell her stock in the 16
corporations on June 30, 1994. She gave notice of her intention
to sell her interests in the five partnerships and the LLC on
July 1, 1994.
81See Appendix schedule 3 for a list of these companies.
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