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decedent or a member of the
decedent’s family in the operation
of the business to which such
interests relate.
The parties have stipulated that the estate has satisfied
the requirements listed in section 2057(b)(1)(A) and (B). The
parties have also stipulated that the only dispute is whether the
stipulated facts demonstrate that the estate has satisfied the
requirements of section 2057(b)(1)(C) and (D).
II. Evolution of the Parties’ Current Positions
In his notice of deficiency, respondent gave the following
explanation for denying the deduction:
It is determined that the deduction claimed under
Section 2057 of the Internal Revenue Code of 1986 is
not allowed because during the eight year period ending
on the date of the Decedent’s death there were not
periods aggregating five years or more during which
such interests were owned by the Decedent or a member
of the Decedent’s family. Therefore the sum of the
adjusted value of the family-owned business interests
plus the amount of gifts of such interests does not
exceed 50% of the adjusted gross estate.
In its petition and opening brief, the estate argued that
there were periods aggregating 5 years or more during which
decedent owned both Keeton Corrections and NSP. The estate
asserted that the language of section 2057(b)(1)(D) refers to
“such interests” and does not require that each individual
interest in a corporation meet the 5-year requirement. The
estate asserted that the two corporations should be viewed as one
collective business because the incorporation of NSP, which
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Last modified: May 25, 2011