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imprudent for the charitable organizations to forgo an
independent appraisal,8 these organizations were not sham
intermediaries. Prior to signing the confirmation agreement, the
Symphony and CFT could have independently valued MIL, forced
arbitration, and thwarted any purported plan to avoid the gift
tax. Cf. Compaq v. Commissioner, 277 F.3d 778, 784 (5th Cir.
2001) (declining, in an income tax case, to disregard a
transaction that involved even a minimal amount of risk and was
conducted by entities separate and apart from the taxpayer),
revg. 113 T.C. 214 (1999).
There is no evidence of an implicit or explicit agreement,
between petitioners and either the Symphony or CFT, that the
Symphony or CFT would accept less than that which petitioners
transferred to each organization. In fact, respondent stipulated
that “Before the call right was exercised, there was no agreement
among Mr. or Mrs. McCord, the McCord brothers, the Symphony or
CFT as to when such a buyout would occur or to the price at which
the buyout would occur.”
In sum, respondent failed to establish that the
undervaluation of MIL, reallocation of MIL interests, and
8 Ms. Willhoite, president of the Symphony, and Mr.
Fjordback, president of CFT, each had an obligation to ensure
receipt of the property interests petitioners transferred to the
Symphony and CFT, respectively. See Tex. Socy. DAR, Inc. v. Ft.
Bend Chapter, 590 S.W.2d 156, 164 (Tex. Civ. App. 1979), (citing
Intl. Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.
Sup. Ct. 1963)); see also Texas Non-Profit Corporation Act, Tex.
Rev. Civ. Stat. art. 1396-2.22 (2002).
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