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approximately 3.01 acres of Phase 5 to Gramor Langer Farms LLC
(Gramor).
C. The Estate Tax Return
The estate timely filed a Form 706, United States Estate
(and Generation-Skipping Transfer) Tax Return (the estate tax
return). As reflected on the estate tax return, the estate
valued LFLLC’s real property at $8,180,000 as of the date of
death and determined that the value of decedent’s 29.19-percent
interest in LFLLC, after all applicable discounts, was $837,000.
On April 2, 2004, respondent issued the estate a notice of
deficiency. Respondent determined that decedent’s 29.19-percent
interest in LFLLC was $2,606,700 rather than $837,000. In
response to the notice of deficiency, the estate filed a petition
with this Court on June 28, 2004.
OPINION
For Federal estate tax purposes, property includable in the
gross estate is generally included at its fair market value on
the date of the decedent’s death. See secs. 2031(a) and 2032(a);
sec. 20.2031-1(b), Estate Tax Regs.4 Fair market value is “the
price at which the 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
4 Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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