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tax-motivated” proceeding of the sort we condemned in Robinson v.
Commissioner, 102 T.C. 116, 129 (1994), affd. in part and revd.
in part 70 F.3d 34 (5th Cir. 1995). In the Commissioner’s view,
the Probate Court’s review is colored by the undisputed fact the
Hickses themselves proposed the allocations, and Kimberly and her
father did not have adverse interests in how the settlement
proceeds were distributed. The Commissioner reasonably suspects
that this might mean the form of the allocations has little
relation to economic reality, and that the disputed $1 million
was Kimberly’s at all times.
We disagree at the outset with the Commissioner’s unlinking
of the $1 million repayment feature of the loan from its
associated income stream. That income stream was Clyde’s from
the start, and it is plain error as a matter of economics to say
in effect that it was valueless. Because the note was callable
at Kimberly’s death, we can estimate its present value as of the
Probate Court’s allocation by using her life expectancy at that
time. That was the subject of considerable dispute, and the
Commissioner argues that it ranged between 4 and 50 years. The
annual payment to Clyde was fixed at $60,000. If one uses a
discount rate of 10% to this income stream (at the time, long-
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