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original Biles report), prepared by Ralph W. Biles, an Arkansas
State certified general appraiser, appraising the fair market
value of the Arkansas motel to be $2,380,000; and (2) a March
1996 report (the Ohrmund report), prepared by Ronald D. Ohrmund,
a California certified general appraiser, appraising the fair
market value of the California motel to be $1,388,000.
When the estate tax return was filed, the executor of
decedent’s estate was unaware of decedent’s individual one-half
ownership interest in parcel 2. Consequently, this asset was not
separately reported on the estate tax return. Similarly,
decedent’s one-half ownership interest in parcel 2 was not taken
into consideration in the Ohrmund report’s valuation of the
California motel or otherwise reflected in the valuation of
decedent’s C&L Bailey shares as reported on Form 706.
The Promissory Note
On decedent’s estate tax return, the $148,700 promissory
note was listed on Schedule E–-Jointly Owned Property, as
decedent’s and Melba’s joint property; consequently, a one-half
interest in the promissory note ($74,350) was reported as being
included in decedent’s gross estate.
Notice of Deficiency
On or about June 13, 1997, respondent commenced the
examination of decedent’s estate tax return. On July 2, 1999,
respondent issued the notice of deficiency.
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