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On August 7, 1996, because the estate contained insufficient
assets to fund all bequests in decedent’s will, an assignment of
partnership interest in the Turner Partnership was executed between
decedent’s estate and Betsy’s five grandchildren, transferring
partial interests in the Turner Partnership to them.
B. Estate Tax Return
A Form 706, United States Estate (and Generation-Skipping
Transfer) Tax Return, was filed on February 21, 1996. A
supplemental estate tax return was filed on December 10, 1996.
On the return, decedent’s estate reported that decedent held
an 87.65-percent interest in the Turner Partnership (with a value
of $875,811) and a 54.12-percent interest in the Thompson
Partnership (with a value of $837,691). The return reported that
decedent held 490 shares of Turner Corp. stock valued at $5,190 and
490 shares of Thompson Corp. stock valued at $7,888. The values
reported on the return were determined by applying a 40-percent
combined discount for minority interest and lack of marketability
to the net asset value of the assets of the partnerships.
The estate tax return reported $19,324 as prior adjusted
taxable gifts pursuant to section 2001(b) related to decedent’s
gifts of the partnership interests in the Turner Partnership and
the Thompson Partnership. The value of the prior gifts had also
been determined by applying a 40-percent combined discount for
minority interest and lack of marketability.
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