Estate of Morton B. Harper, Deceased, Michael A. Harper, Executor - Page 18

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          Generation-Skipping Transfer) Tax Return, were filed on behalf of           
          decedent and were received by the Internal Revenue Service on               
          October 16, 1995, and November 2, 1995, respectively.  The gift             
          tax return reported the .4-percent general and 24-percent limited           
          partnership interests given to Michael and the .6-percent general           
          and 36-percent limited partnership interests given to Lynn.  The            
          estate tax return included as part of decedent’s gross estate the           
          Trust’s 39-percent limited partnership interest in HFLP.                    
               Notices of deficiency were issued with respect to the above            
          returns on October 21, 1998.  As previously stated, respondent              
          therein advanced a primary and an alternative position.  Under              
          the primary position, the full value of the assets held by HFLP             
          was included in decedent’s gross estate, and prior taxable gifts            
          were reduced to $0, resulting in an estate tax deficiency of                
          $331,171 and no deficiency in gift tax.  Under the alternative              
          position, respondent determined an estate tax deficiency of                 
          $150,496 and a gift tax deficiency of $180,675.                             
          I.  Contentions of the Parties                                              
               The parties in this case disagree regarding how properly to            
          treat the partnership interests transferred by decedent to his              
          children during life and the interest included through the Trust            
          in his estate at death.  Respondent contends that the full fair             
          market value of the assets contributed to HFLP is includable in             

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