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13. Federal Estate Tax Return
The estate timely filed a Federal estate tax return on
October 16, 2002. The return failed to report the 1991 and 1999
gifts of $595,000 and $70,000, respectively. The return was
prepared by Anderson and signed by John Rector as coexecutor of
decedent’s estate. The Federal estate tax return reported that
decedent’s gross estate on the applicable valuation date
consisted of a single asset; namely, her interest in the 1991
revocable trust. The return elected the alternate valuation date
of July 11, 2002, as the applicable valuation date. The return
reported that the fair market value of the 1991 revocable trust
as of the applicable valuation date was $4,757,325, calculated as
follows:
Net asset value (NAV) of RLP $8,126,579
Decedent’s interest in RLP 72.272%
Decedent’s proportionate share of NAV 5,873,241
Less 19 percent for lack of control
and lack of marketability 1,115,916
Discounted value of decedent’s interest 4,757,325
OPINION
1. Preface
The value of an interest in property is included in a
decedent’s gross estate if: (1) The decedent made an inter vivos
transfer of the property; (2) the transfer was for less than
adequate and full consideration; and (3) the decedent retained
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