Estate of Howard Gilman, Deceased, Bernard D. Bergreen and Natalie Moody, Executors - Page 2

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               When Howard Gilman (decedent) died in 1998, his estate                 
          consisted primarily of stock of Gilman Investment Co., Inc.                 
          (GIC), a holding company for decedent’s businesses and other                
          assets (the Gilman assets).  Before he died, decedent formed the            
          Howard Gilman Foundation (the foundation).  Decedent bequeathed             
          the residue of his estate to the foundation.                                
               Bernard D. Bergreen (Bergreen) and Natalie Moody (Moody)               
          were coexecutors of the estate, the managers of a limited                   
          liability company named HG Estate, LLC (HG), officers of GIC, and           
          members of the board of directors of the foundation.                        
          Bergreen and Moody hired William Davis (Davis) to serve as chief            
          operating officer of Gilman Paper Co. and Gilman Building                   
          Products, effective June 1998.                                              
               In 1999, as part of a tax-free reorganization under section            
          368,1 the executors transferred the GIC stock and all of GIC’s              
          assets to HG and its subsidiaries.  The foundation was the only             
          member of HG.  Bergreen received tax advice that, if the                    
          restructuring were completed by January 28, 1999, and the assets            
          then sold, HG would save $160 million in tax on capital gains               
          which would been have resulted if the estate had sold the assets.           

               1  Section references are to the Internal Revenue Code in              
          effect as of the date of decedent’s death.  Rule references are             
          to the Tax Court Rules of Practice and Procedure.  Amounts have             
          been rounded to the nearest dollar.                                         

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Last modified: May 25, 2011