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Gift Tax Returns and the Notice of Deficiency
Petitioners filed Forms 709, United States Gift (and
Generation-Skipping Transfer) Tax Return, for 1998, 1999, and
2000. On those returns, petitioners reported split gifts of
$462,379, $183,792, and $14,307.71 for 1998, 1999, and 2000,
respectively. Those amounts reflect the discounted values of the
partnership interests transferred to the children, which were
calculated by multiplying, for each year in issue, the value of
the property petitioners contributed to the partnerships, as
reported on the Forms 709, by the percentage of the partnership
interests transferred to the children. Petitioners then applied
lack of marketability and minority interest discounts and
subtracted the annual exclusion amount for each child.
In the notice of deficiency, respondent determined that the
fair market value of the property transferred to the children was
$1,798,647, $791,826, and $164,103 for 1998, 1999, and 2000,
respectively. Those amounts reflect the value of the property
that petitioners contributed to the partnerships without lack of
marketability and minority interest discounts.
Valuation Discounts
The parties stipulate that, if we conclude (1) that the
partnership interests, rather than the underlying assets, should
be valued for gift tax purposes and (2) that discounts should be
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Last modified: May 25, 2011