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On November 10, 1992, petitioner sold the residence to the
Foundation. The Foundation gave petitioner $250,000, and
petitioner and his wife continued to live in the residence, rent-
free for 3 years. On June 3, 1993, the Foundation transferred an
additional $135,000 to petitioner. Respondent’s expert testified
that on November 10, 1992, the present value of 3 years of rent
was $111,371,2 and the present value of the additional $135,000
payment was $131,905. Thus, according to the uncontradicted
testimony of respondent’s expert, on November 10, 1992, the fair
market value of the residence was $535,000 and the present value
of the $250,000 payment, the $135,000 payment, and the rent-free
occupation of the residence was $493,276.
Petitioner may be a substantial contributor only if the
transfer to the Foundation exceeds $47,432, which is 2 percent of
the total contributions received by the Foundation at or before
the end of 1992 (i.e., $2,371,589). Sec. 507(d)(2)(A).
Petitioner’s net transfer of $41,724 (i.e., the difference
between the $535,000 fair market value of the residence and the
$493,276 consideration received from the Foundation) was
insufficient to make him a substantial contributor to the
Foundation. At trial, respondent conceded that petitioner would
not be a substantial contributor if the Court found that the
2 The present value was adjusted to take into account the
value of the tenants’ payment of property taxes and insurance.
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