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Item 1995 1996 1997
Partnership
Rent $60,500 $54,000 $40,500
Expenses and depreciation (59,040) (48,015) (49,234)
Net income (loss) 1,460 5,985 (8,734)
Decedent’s distributive share 525 2,960 (2,896)
3. The Estate and Gift Tax Returns
On November 9, 1998, Mr. Bigelow, as executor of decedent’s
estate, signed gift tax returns for 1994-97 and decedent’s estate
tax return. The gift tax returns were filed with the estate tax
return. The Internal Revenue Service received decedent’s estate
and gift tax returns on November 12, 1998.
a. The Gift Tax Returns
On the gift tax returns, Mr. Bigelow reported that decedent
had made taxable gifts of $463,960 in 1994, $10,785 in 1995, zero
in 1996, and $2,000 in 1997. Mr. Bigelow reported that decedent
had given limited partnership interests in Spindrift to her
children and grandchildren valued at $61.85 per unit in 1994 and
1995, $67.79 per unit in 1996, and $61.90 per unit in 1997.
The valuation of the limited partnership units reported on
the gift tax returns was made on the basis of a market approach
using the appraised value of the Padaro Lane property. Ninety-
nine percent of that value was assigned to the limited
partnership interests. The value of each unit of limited
partnership interest was calculated by dividing 99 percent of the
value of the Padaro Lane property by the number of limited
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