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substantially identical to the original notes except that they
did not contain the self-canceling clauses.
After all of the above transactions, the 25,078 shares of
series B stock were owned as follows:
Individual Number of shares
Petitioner 1,878
Robert 4,644
David 4,644
Robert’s trust 6,956
David’s trust 6,956
D. Respondent’s Determinations
Respondent determined: (1) The DGA stock at issue had a
fair market value of $907 per share on November 29, 1999, and
$906 per share on November 29, 2000; (2) each of the 1999 notes,
which had a face value of $2,232,000, had a fair market value of
$1,687,704; and (3) petitioner is liable for gift tax as a result
of these transfers because he received consideration worth less
than the fair market value of the transferred stock.
OPINION
A. Contentions of the Parties
Petitioner contends that the fact that the price paid for
the DGA stock at issue in November 29, 1999, was set by Empire,
an unrelated third-party appraiser, means the price was the fair
market value. Petitioner also contends that testimony of his
expert witnesses supports Empire’s estimate of the value.
Respondent disagrees with petitioner’s contentions.
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