- 13 -
number of years, and therefore, they did not expect that these
entities would be making distributions to members during such
years. Treeco reported losses in the amounts of $42,912,
$121,350, and $23,663 during 1995, 1996, and 1997, respectively.
Hacklco reported losses of $52,292 during 1997. Treesource
reported losses in the amounts of $75,179, $153,643, and $95,1561
in 1997, 1998, and 1999, respectively. Neither Treeco nor its
successors had at any time through April 5, 2001, generated net
profits or made distributions of cash or other property to
members.
Discussion
I. Settled and Disputed Issues
The parties have previously filed a Stipulation of Partial
Settlement, and a Supplemental Stipulation of Partial Settlement,
in which they agreed that the fair market value of both the
voting and nonvoting units of Treeco, LLC, was $10.43 per unit on
the date of the 1996 gifts at issue in these cases. Accordingly,
the sole issue for determination by the Court is whether
petitioners’ gifts of units in Treeco qualify for the annual
exclusion provided by section 2503(b), a dispute which turns on
1 Although the parties stipulated that Treesource reported a
loss of $99,156 for 1999, Treesource’s 1999 return in fact
reflects a loss of $95,156. See Cal-Maine Foods, Inc. v.
Commissioner, 93 T.C. 181, 195 (1989) (holding that stipulations
are properly disregarded where clearly contrary to evidence
contained in the record).
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011