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zero. This schedule reported the “Date of gift” as June 30,
1994.
In the statutory notice, respondent determined, without
citing any authority, that the value of the gift Jean True made
by lending her sons the sales price from June 30, 1994, to the
payment date was $192,307. The notice explained that this amount
was equal to 91 days of interest on the $13,298,978 aggregate
sales price, calculated using the 5.9-percent interest rate the
True family used for other intrafamily loans. Although the
notice stated that “Arguably, the 5.9% is below-market”, it also
stated that “no adjustment will be made for this due to the
extreme difficulty of computing it”. The notice did not cite any
authority for these conclusions.
OPINION
I. Summary of Arguments
On June 30, 1994, and July 1, 1994 (notice dates), Jean True
gave her sons notice that she wanted to sell her interests in 22
True companies. This notice triggered the provisions of the buy-
sell agreements that required Jean True to sell her interests to
her sons.
The buy-sell agreements provided that the effective dates of
these sales were the notice dates. However, the buy-sell
agreements also stated that the sales did not have to “be
consummated” until 6 months after those dates. In fact, Jean
True did not receive payment for her interests until September
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