Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 9

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          respondent determined that the value of decedent’s 50 shares of             
          C&L Bailey stock was $9,025 per share, yielding the $451,263                
          total value determined in the notice of deficiency.  Respondent             
          used the identical approach in valuing at $451,263 the 50 shares            
          of C&L Bailey stock includable in the gross estate under section            
               The Promissory Note                                                    
               In the notice of deficiency, respondent determined that                
          decedent’s estate tax return improperly treated the promissory              
          note as decedent’s and Melba’s jointly owned property and                   
          improperly reported a half interest in the note as includable in            
          the gross estate; accordingly, respondent reduced the gross                 
          estate by $74,350.  Respondent further determined that upon                 
          assignment of the promissory note to three of his children in               
          1995, decedent had made three taxable gifts totaling $118,700               
          (after allowance for three $10,000 annual exclusions).                      
               Other Taxable Gifts                                                    
               In the notice of deficiency, respondent also determined that           
          decedent had made unreported taxable gifts of $20,000 and $10,000           
          in 1989 and 1993, respectively.  The notice of deficiency                   
          contains no other explanation of this determination or                      
          description of the alleged unreported gifts or of the alleged               

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Last modified: May 25, 2011