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FINDINGS OF FACT
Petitioners resided in Madison, Wisconsin, when they filed
the petitions in the cases at hand.
Demco, Inc. (Demco), is a Wisconsin corporation that has
elected to be an S corporation for Federal income tax purposes.
Mr. Wall was Demco’s sole stockholder immediately before the
gifts in issue. He owned all 1,200 issued and outstanding shares
of Demco’s voting common stock and all 12,000 issued and
outstanding shares of Demco’s nonvoting common stock.
On January 1, 1992, Mr. Wall (as grantor) and Michael O.
Hartz (as trustee) created two irrevocable trusts for the benefit
of each of Mr. Wall’s 10 children. Of these 20 trusts, 10 were
known as “annual exclusion” trusts, and 10 were known as
“nonvoting stock” trusts.
Also on January 1, 1992, Mr. Wall gave 443 shares of his
Demco nonvoting common stock to each of the annual exclusion
trusts and 495 shares of his Demco nonvoting common stock to each
of the nonvoting stock trusts. As a result of these
transactions, Mr. Wall gave 938 shares of the Demco nonvoting
common stock to trusts for the benefit of each of his 10
children, for total gifts of 9,380 shares (collectively, the
gifts).
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