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venture to develop the Victorville property. Under the
partnership agreement, WSP, as general partner, would receive 25
percent of the profits, losses, and distributions from the
partnership, and the trustees, as limited partner, would receive
75 percent of the profits, losses, and distributions from the
partnership. Ownership of the Victorville property remained in
the trust, and the partnership agreement stated that portions of
the Victorville property would be transferred to Bear Valley
Partners as buyers were found.
On July 1, 1999, Bear Valley Partners sold 15.87 acres
(691,297 square feet) of the Victorville property to Lowe’s H I
W, Inc. (Lowe’s), for approximately $4.1 million. The sale was
subject to a holdback of a portion of the purchase price and a
reimbursement arrangement concerning improvements to be made by
Bear Valley Partners to the Victorville property.
On March 21, 1997, the estate filed a Federal estate tax
return. The estate elected the date of death (June 22, 1996) as
the valuation date. On the return, the estate reported the value
of the Victorville property as $4.05 million. On March 8, 2000,
respondent issued a statutory notice of deficiency to the estate,
determining a deficiency of $8,675,853. Respondent’s
determination of the deficiency resulted from a valuation of the
property at $16.3 million. The estate timely petitioned this
Court for review of respondent’s determination.
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Last modified: May 25, 2011