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additional gift taxes (along with interest and related costs)
arising “by reason of any proposed adjustment to the amount of
[the] 1991 and 1992 gifts” by decedent of the National Fruit
stock.
Redemption of Decedent’s Other National Fruit Shares
On December 26, 1991, National Fruit redeemed all of
decedent’s preferred stock for cash and a private annuity. On
January 6, 1992, National Fruit redeemed decedent’s remaining
common stock in consideration for a $6,065,300 promissory note
(the note) payable to decedent by National Fruit, with payment
guaranteed by the donee children. On the same date, decedent
established the Frank Armstrong, Jr. Trust for the Benefit of
Frank Armstrong, Jr. (the trust), naming Frank Armstrong III as
trustee. Decedent assigned the note to the trust. The terms of
both the note and the trust provided for the payment of gift and
income tax liabilities and related costs resulting from the 1991
and 1992 gifts and redemptions of decedent’s National Fruit
stock.
1991 and 1992 Gift Taxes
Decedent’s 1991 and 1992 Gift Tax Returns
On his 1991 and 1992 Federal gift tax returns, decedent
reported his gifts of National Fruit stock, valued at $100 per
share, resulting in reported gift tax liabilities of $1,229,483
and $3,027,090 for 1991 and 1992, respectively. With each gift
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