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and did not, make any distributions from that partnership to pay
any Federal and State estate taxes with respect to Mr. Stone’s
estate.44
At a time not disclosed by the record after Mr. Stone’s
death, Ernst & Young, LLP (E&Y), prepared a document entitled
“Estate of E.E. Stone, III Allocation of Estate Tax” (E&Y’s
Estate tax allocation schedule). That document showed for each
of ES4LP, CRSLP, RSMLP, and MSFLP the amount of Federal and State
estate taxes that each such partnership was to pay in 1998 and
44None of the Federal and State estate taxes with respect to
Mr. Stone’s estate was attributable to Mr. Stone’s total 69.973
percent partnership interest in ES3LP. As discussed above, that
partnership interest was transferred along with certain other
property to the AWS Trust with respect to which, as discussed
below, an election under sec. 2056(b)(7) was made.
Because of Mr. Stone’s death in 1997, in that year, as
reflected in the partnership return that ES3LP filed for 1997,
ES3LP opened a capital account for his estate (Mr. Stone’s
estate’s capital account in ES3LP), and the balances in Mr.
Stone’s capital account in ES3LP as a general partner and a
limited partner were transferred to Mr. Stone’s estate’s capital
account in ES3LP. The partnership return that ES3LP filed for
1997 reflected that ES3LP did not make distributions during that
year to any of its other partners. Because of Ms. Stone’s death
in 1998, in that year, as reflected in the partnership return
that ES3LP filed for 1998, ES3LP opened a capital account for her
estate (Ms. Stone’s estate’s capital account in ES3LP), and the
balance in Ms. Stone’s capital account in ES3LP as a limited
partner was transferred to Ms. Stone’s estate’s capital account
in ES3LP. The partnership return that ES3LP filed for 1998
reflected that ES3LP did not make distributions during that year
to any of its other partners. The partnership return that ES3LP
filed for 1999 reflected that ES3LP made pro rata distributions
during that year to its partners totaling $567,172, as follows:
$396,867 to Mr. Stone’s estate, $164,633 to Ms. Stone’s estate,
and $1,418 to each of the children. The record does not disclose
the purpose or use of those distributions.
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