- 316 -
As discussed supra under Issue 2 of this opinion, we have
found that Jean True’s sales of her interests in True Oil,
Eighty-Eight Oil, True Ranches, Belle Fourche, and Black Hills
Trucking gave rise to taxable gifts, because the fair market
value of Jean True’s interests in those companies exceeded the
sales prices for those interests determined under the buy-sell
agreements. This establishes that the sales of Jean True’s
interests in those companies, including the parts of the deferred
payment arrangement relating to those sales, were not
transactions in the ordinary course of business and were gifts.
See Frazee v. Commissioner, 98 T.C. at 589.
With respect to the sales of Jean True’s interests in the
remainder of the 22 True companies, respondent has not asserted
that the formula sales prices were less than fair market value.
We have found, however, that Jean True transferred the benefits
and burdens of ownership of her interests in those companies to
her sons on the notice dates, even though the sons were not
required to pay for those interests until 6 months after those
dates. We believe that parties dealing at arm’s length would not
have transferred ownership of such business interests on these
terms. Independent parties would have required either the
payment of interest on the purchase price during the period from
the notice dates to the payment date, or an adjustment to the
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