Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 32




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          decedent’s 50 shares of C&L Bailey stock was $357,738 (see                  
          Appendix B).                                                                
          B.  Valuation of QTIP Property                                              
               As previously discussed, the parties agree that the value of           
          the 50 shares of C&L Bailey stock includable in decedent’s gross            
          estate pursuant to section 2044 and the value of the 50 shares of           
          C&L Bailey stock that decedent owned outright are identical.                
          Consequently, we hold that the 50 shares of C&L Bailey stock                
          includable in decedent’s gross estate pursuant to section 2044              
          have a value of $357,738.                                                   
          C.  Unreported Taxable Gifts                                                
               The Promissory Note                                                    
               In 1993, decedent transferred certain of his separate                  
          property, including the Lake Catherine property, into the grantor           
          trust.  On January 31, 1994, the Manesses executed a $148,700               
          promissory note in favor of the grantor trust.  A year later, on            
          January 31, 1995, after decedent had revoked the grantor trust,             
          decedent and Melba executed a warranty deed conveying the Lake              
          Catherine property to the Manesses.  On the same date, decedent             
          and Melba executed an assignment of the promissory note to three            
          of decedent’s children.                                                     
               Respondent contends that the assignment of the promissory              
          note gave rise in 1995 to taxable gifts from decedent to three of           
          his children in the full amount of the promissory note (less                







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