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made one-half by each of them pursuant to section 2513. As
previously, annual exclusions were claimed under section 2503(b)
with respect to the gifts. Respondent disallowed the exclusions
by separate notices of deficiency dated April 14, 2000.
Operations of Treeco, LLC, and Successor Entities
On December 19, 1996, A.J. Hackl organized Hacklco, LLC, a
Georgia limited liability company, and in 1997, Treeco was
dissolved and merged into Hacklco, LLC. Similarly, on May 20,
1997, Treesource, LLLP, a Georgia limited liability limited
partnership, was organized, and Hacklco was merged into this
entity in 1998. These changes appear to have wrought no
alteration in the nature and operation of the Treeco enterprise
and, while enumerated for clarity, do not affect our analysis of
the gifted units. Petitioners continued making gifts of voting
and nonvoting units of Treeco’s successors in interest in 1997
and 1998, resulting in petitioners’ children and their spouses
owning, at all times subsequent to January 2, 1998, 51 percent of
the voting power of Treesource.
Treeco and its successors have at all times actively engaged
in tree farming. Since operations commenced in 1995, Treeco and
its successors have planted approximately 8 to 10 million trees
on their lands. A.J. Hackl, as manager of Treeco and its
successors, devotes approximately 750 to 1000 hours per year to
the farming operations. In addition, Georgia Pacific Corporation
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