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the sole ownership of the property as sole surivivor of three
joint tenants culminating a 36-year period. In 1987, decedent
exchanged an undivided one-half interest for a place to live and
for services. As it relates to decedent, it could be said that
her cost might have been the amount she paid, if any, at the time
(1951) she began occupying Western.
No matter which approach we use, the cost, plus improvements
of Western, would not exceed its $270,000 agreed fair market
value as of the time of decedent’s death in 1996. Using the
$270,000 in the denominator of the fraction clearly sets a higher
bar for the estate’s quest for exclusion of Mrs. McReady’s joint
interest. We are not called upon to decide whether an exclusion
of more than one-half of the fair market value from decedent’s
gross estate may have been warranted because the McReadys may
have paid more consideration than decedent; the parties have not
placed these aspects in issue or addressed them.
Our holding that $136,187 was the indexed fair rental value
exchanged for the undivided one-half interest in Western
satisfies the estate’s burden of showing that Mrs. McReady’s
acquisition was for an adequate and sufficient consideration to
support the estate’s claim that $135,000 of the $270,000 fair
market value can be excluded from the gross estate.
Although the estate has satisfied its burden with respect to
excluding $135,000 from the gross estate, we note that we have
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Last modified: May 25, 2011