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Petitioners J. Zane Smith (Zane) and Shannon R. Creese Smith
(Shannon) are married and resided in Earlville, New York, at the
time their petition was filed. They timely filed Forms 1040 for
1998, 1999, 2000, and 2001. On April 15, 2005, respondent sent
notices of deficiency to Zane and Shannon for their 1998, 1999,
2000, and 2001 tax years.
Rance and LaRhea Smith are the parents of Rhett and Zane
Smith.
Noncash Charitable Contributions
Each couple claimed deductions for noncash charitable
contributions of interests in their family limited partnership
(FLPs) which, essentially, was to hold interests in their closely
held, family-owned Arizona C corporation Beneco, Inc. (Beneco).
Beneco had been incorporated in 1989 with 1,000 initially issued
shares of stock, held as follows:
Petitioners Shares
Rance 250.5
LaRhea 250.5
Rhett and Alice 249.5
Zane and Shannon 249.5
Total 1,000.0
Beneco’s business was to provide a qualified retirement plan
and trust and qualified health and welfare trust services to
contractors who work under prevailing State and Federal wage laws,
including the Federal Davis-Bacon Act. For its taxable years
ended March 31, 1997 through 2004, Beneco did not pay a dividend.
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