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not consider Dave True’s ailments to be life threatening or his
death to be imminent at the time of his 1993 transfers.24
Dave True timely filed a 1993 Federal gift tax return (Jean
True signed as consenting spouse) disclosing the transfers but
treating them as sales, thereby reporting no taxable gifts.
Mr. Harris expected the return to be audited and the transaction
to be challenged by the IRS. Dave True saw this risk as his
opportunity to test (through litigation) the existing buy-sell
agreements’ ability to fix transfer tax value of the True
companies.
On March 3, 1997, respondent issued to the estate and to
Jean True, individually, duplicate Notices of Deficiency
(collectively, 1993 gift tax notice), determining that the values
of interests transferred by Dave True in 1993 were higher than
reported book value.25 However, since issuing the original 1993
gift tax notice, respondent has conceded the reported values of
interests in Rancho Verdad and True Drilling that were
transferred by Dave True in 1993. Appendix schedule 1, infra,
24In response to a question from the Court, Mrs. True
testified that Dave True had been a smoker, but that he hadn’t
smoked for some time before his death. Mrs. True had previously
testified that Dave True was “on oxygen for chronic bronchitis
for about 2-1/2 years before he died.”
25Jean True’s notice of deficiency was identical to the
estate’s and was issued solely because she consented to split
gifts made by Dave True for calendar year 1993.
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