- 10 -                                         
          applied to the net asset value of the partnership assets, the               
          following discounts should apply:                                           

                           Date of    Minority   Marketability   Combined             
          Partnership     Transfer    Discount     Discount      Discount             
          SFLP I        12/28/98      5.88%          35%        38.82%                
          SFLP II       12/20/99      15.44           35        45.0                  
          SFLP II       1/31/00       17.12           35        46.13                 
          There is no dispute as to the value of the stock without any                
               Section 2501 imposes a tax on the transfer of property by              
          gift during the taxable year.  This tax is imposed whether the              
          transfer is in trust or otherwise and whether the gift is direct            
          or indirect.  See sec. 2511.  A gift of property is valued as of            
          the date of the transfer.  See sec. 2512(a).  The gift is                   
          measured by the value of the property passing from the donor,               
          rather than by the value of the property received by the donee or           
          upon measure of enrichment to the donee.  See sec. 25.2511-2(a),            
          Gift Tax Regs.                                                              
               The fair market value of the transferred property is the               
          “price at which property would change hands between a willing               
          buyer and a willing seller, neither being under any compulsion to           
          buy or to sell, and both having reasonable knowledge of relevant            
          facts.”  Sec. 25.2512-1, Gift Tax Regs.  Where property is                  
          transferred for less than adequate and full consideration in                

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Last modified: May 25, 2011