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consisted of marketable securities and approximately 30 percent
consisted of interests in real estate limited partnerships. The
assignees were petitioners’ children, trusts for the benefit of
the children, and two charitable organizations (Communities
Foundation of Texas, Inc. (CFT) and Shreveport Symphony, Inc.
(the symphony)). In calculations submitted with their Federal
gift tax returns, petitioners reported the gross value of the
gifted interest as $7,369,278 ($3,684,639 apiece). Respondent’s
adjustments reflect his determination that the gross fair market
value of the gifted interest was $12,426,086 ($6,213,043 apiece).
Principally, we must determine the fair market value of the
gifted interest and whether each petitioner may reduce his or her
one-half share thereof to account for the children’s contingent
obligation (as a condition of the gift) to pay the additional
estate tax that would result from the transaction if that
petitioner were to die within 3 years of the date of the gift.
Preliminarily, we must determine whether petitioners transferred
all of their rights as class B limited partners or only their
economic rights with respect to MIL. We must also determine the
amount of the gift to CFT.
II. Relevant Statutory Provisions
Section 2501(a) imposes a tax on the transfer of property by
gift. Section 2512(a) provides that, if a gift is made in
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