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“adjusted value” and “adjusted gross estate”.4
By stipulating that the “combined value” of Keeton
Corrections and NSP exceeds 50 percent of the adjusted gross
estate, the parties have left out a crucial part of the
calculation by not including the word “adjusted” in front of
value. The parties did not, however, omit the word “adjusted”
from “adjusted gross estate”. The estate is not alleging that
4Sec. 2057(c) and (d) defines the “adjusted gross estate”
and the “adjusted value” of the QFOBIs. The adjusted value of
the QFOBIs enters into the numerator, and the adjusted gross
estate is the denominator for purposes of the 50-percent test
under sec. 2057(b)(1)(C). The adjusted value of the QFOBIs is
determined by aggregating the value of all qualified family-owned
business interests that are includable in the decedent’s gross
estate and are passed from the decedent to a qualified heir.
This amount is then reduced by the value of claims and mortgages
under sec. 2053(a)(3), and (4), less the following: (1)
Indebtedness on a qualified residence of the decedent (determined
in accordance with the requirements for deductibility of mortgage
interest set forth in sec. 163(h)(3)); (2) indebtedness incurred
to pay the educational or medical expenses of the decedent, the
decedent’s spouse, or the decedent’s dependents; and (3) other
indebtedness of up to $10,000. H. Conf. Rept. 105-220, at 397-
398 (1997), 1997-4 C.B. (Vol. 2) 1457, 1867-1868. The value of
the adjusted gross estate is equal to the decedent’s gross
estate, reduced by any claims against the estate and mortgages on
estate assets, and increased by the amount of the following
transfers, to the extent not already included in the decedent’s
gross estate: (1) Any lifetime transfers of qualified business
interests that were made by the decedent to members of the
decedent’s family provided such interests have been continuously
held by members of the decedent’s family (other than the
decedent’s spouse), plus (2) any other transfers from the
decedent to the decedent’s spouse that were made within 10 years
of the date of the decedent’s death, plus (3) any other gifts
made by the decedent within 3 years of the decedent’s death,
except nontaxable transfers made to members of the decedent’s
family covered by the annual per donee exclusion of sec. 2503(b).
Id.
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