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financial statements. According to the estate tax return for the
Estate of Bob Hughes, the stock of Advance Leasing had a fair
market value of zero as of April 10, 1996. Advance Leasing had
net losses of $66,672 for 1994, $50,995 for 1995, and $40,526 for
1996. Even taking into account decedent’s $400,000 note, Advance
Leasing had a negative total net worth of $22,110 at the end of
1997 and $23,356 at the end of 1998.7
Advance Leasing used the entire $400,000 it received in 1999
from decedent to repay some of the more than $900,000 it then
owed to HELP. Thus, the $400,000 payment to HELP directly
benefited decedent’s children and grandchildren.
We do not believe that the value of Advance Leasing’s stock
increased from zero on April 10, 1996 (as reported on the estate
tax return for Bob Hughes which McBride signed) to $400,000 on
April 29, 1997, and then fell to zero on July 25, 1999 (the date
decedent died, as reported on decedent’s estate tax return also
signed by McBride). We conclude that the 4,000 shares issued to
decedent had little or no value when McBride signed the stock
subscription agreement on April 29, 1997.8 Thus, decedent did not
receive full and adequate consideration as required by section
7 As discussed supra, Advance Leasing’s 1997 and 1998
financial statements did not reflect the additional 4,000 shares
issued to decedent and the $400,000 stock subscription agreement
note payable to Advance Leasing.
8 Neither party offered expert testimony on the value of
Advance Leasing stock on Apr. 29, 1997.
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