- 12 -
value of Primrose and the value of Mr. McReady’s services in
managing Bradley.
With respect to the fair rental value, the estate called two
expert witnesses and through their testimony was able to
establish an indexed fair rental value for Primrose. We have
found that the fair rental value of Primrose for the period under
consideration was $408,560. With three adults sharing Primrose,
we use one-third of the rental value or $136,187 as the
consideration attributable to the decedent’s use of Primrose.
The rental value was calculated for the amount of time that
decedent actually survived from the time of the 1987 agreement.6
We note that $136,187 is greater than one-half the $270,000
fair market value of Western at the time of decedent’s death.
However, the standard for evaluating the amount of consideration
in this context is specifically set out in section
20.2040-1(a), Estate Tax Regs.7 That formulaic approach to
6 We note that the fair rental value was derived by
multiplying the number of years that decedent actually lived with
the McReadys by the annualized fair rental value on the basis of
Bureau of Labor Statistics indexes. Decedent survived almost 9
years from the time of the 1987 agreement with the McReadys.
Decedent was 75 years old at the time of the agreement, and her
life expectancy, at that time, was somewhat longer than she
actually survived. Accordingly, the estate’s approach to value
was conservative.
7 Sec. 20.2040-1(a)(2), Estate Tax Regs., in pertinent part,
provides:
the entire value of * * * [jointly held] property is
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011