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occurred fewer than 5 years before decedent’s death, was a
continuation of the business of Keeton Corrections that provided
the same services to the same customers and under the same
contracts. Therefore, the estate concluded that it satisfied the
50-percent test under section 2057(b)(1)(C) because it would be
able to include the values of both corporations. The estate also
argued that even if NSP did not satisfy section 2057(b)(1)(D),
the estate could still include the value of NSP in the 50-percent
test calculation under section 2057(b)(1)(C) because NSP was an
“Includible qualified family-owned business interest” under
section 2057(b)(2), which section 2057(b)(1)(C) cross-
references.3
In his opening brief, respondent asserted that even if the
estate were allowed to combine the interests in NSP and Keeton
Corrections for purposes of section 2057(b)(1)(C), the adjusted
value of those combined interests would still not exceed 50
percent of the adjusted gross estate. Since the estate would not
be able to satisfy section 2057(b)(1)(C), even if able to
aggregate the values of both corporations, respondent concluded
that the estate would not be able to qualify for the deduction.
3Sec. 2057(b)(2) provides that “includible qualified family-
owned business interests” are interests that are included in
determining the value of the decedent’s gross estate and that
have passed to a qualified heir from the decedent.
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Last modified: May 25, 2011