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On August 24, 2001, a notice of deficiency was sent to the
estate. The notice increased the value of decedent’s interest in
LKHP. The notice determined decedent’s 99.95-percent interest in
LKHP to be valued at $4,526,740 based upon the undiscounted
values of the LKHP properties. The notice determined a
deficiency in the estate tax of $1,269,498. The increased
values, as determined in the notice, were not supported by
independent appraisals because LKHP was not recognized as a valid
partnership entity.
Value of the LKHP Properties as Agreed by the Parties
The parties have stipulated the undiscounted values of
decedent’s interest in the seven LKHP properties as follows:
Property Value
West Collins $1,285,000
Enterprise 1,093,787
North Main 975,000
University property 1,074,131
Manzanita 2,261
Crescent Bay 265,176
Railroad 115,711
Total $4,811,066
OPINION
Burden of Proof
Generally, under section 7491(a), in any court proceeding,
if a taxpayer introduces credible evidence with respect to any
factual issue, the burden of proof is shifted to respondent. The
burden shifts, however, only when the taxpayer has maintained all
records and has cooperated with reasonable requests by respondent
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