120 T.C. No. 13
UNITED STATES TAX COURT
CHARLES T. MCCORD, JR., AND MARY S. MCCORD, DONORS, Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7048-00. Filed May 14, 2003.
Ps, their children, and their children’s
partnership formed a family limited partnership (PT).
In 1996, Ps assigned interests in PT to several
assignees pursuant to an agreement that contains a
formula clause. The formula clause provides that (1)
Ps’ children, trusts for their benefit, and S, a
charitable organization, are to receive interests
having an aggregate fair market value of a set dollar
amount, and (2) C, another charitable organization, is
to receive any remaining portion of the assigned
interests. Ps’ children agreed to pay all transfer
taxes resulting from the transaction, including the
estate tax liability under then sec. 2035(c), I.R.C.
1986, that would arise if one or both Ps were to die
within 3 years of the date of the assignments.
Pursuant to a second agreement, the assignees
allocated the assigned interests among themselves in
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