- 3 -
interests of 94.83 percent in KLLP and of 33.33 percent in KLBP
LLC.
On decedent’s date of death, KLLP held assets totaling
$1,226,421, which consisted of $807,271 cash and $419,150 in
certificates of deposit, and had no liabilities.
In December 1999, the estate employed Appraisal
Technologies, Inc. (ATI), to prepare a valuation of decedent’s
interests in these closely held entities. ATI concluded that a
53.5-percent valuation discount was applicable.1
On September 1, 2000, the estate filed a Form 706, United
States Estate (and Generation-Skipping Transfer) Tax Return,
reporting decedent’s 94.83-percent interest in KLLP at a value of
$521,565 and his interest in KLBP LLC at a value of $1,833.33.
Respondent issued a notice of deficiency determining that
the discounts claimed by the estate were too high and lower
discounts were appropriate.2 Respondent contends that the estate
is entitled to a 25.2-percent discount.
1 The estate states several times on brief that ATI used a
55.15-percent discount; however, in calculating the discounts
applied by the estate, we find that ATI used a 53.5-percent
discount.
2 The statutory notice of deficiency sets forth numerous
alternative arguments including arguments based on secs. 2035,
2036, 2038, and 2703. At trial, respondent conceded all the
alternative arguments.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011