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assignees by way of the assignment agreement (collectively, the
gifted interest) are the subject of this dispute.
Under the terms of a “formula clause” contained in the
assignment agreement (the formula clause), the children and the
trusts were to receive portions of the gifted interest having an
aggregate fair market value of $6,910,933; if the fair market
value of the gifted interest exceeded $6,910,933, then the
symphony was to receive a portion of the gifted interest having a
fair market value equal to such excess, up to $134,000; and, if
any portion of the gifted interest remained after the allocations
to the children, trusts, and symphony, then CFT was to receive
that portion (i.e., the portion representing any residual value
in excess of $7,044,933). The children (individually and as
trustees of the trusts) agreed to be liable for all transfer
taxes (i.e., Federal gift, estate, and generation-skipping
transfer taxes, and any resulting State taxes) imposed on
petitioners as a result of the conveyance of the gifted interest.
The assignment agreement leaves to the assignees the task of
allocating the gifted interest among themselves; in other words,
in accordance with the formula clause, the assignees were to
allocate among themselves the approximately 82-percent
partnership interest assigned to them by petitioners. In that
regard, the assignment agreement contains the following
instruction concerning valuation (the valuation instruction):
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Last modified: May 25, 2011