Estate of Duane B. Farnam, Deceased, Mark D. Farnam, Personal Representative, and Estate of Lois L. Farnam, Deceased, Mark D. Farnam, Personal Representative - Page 2

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               SWIFT, Judge:  Respondent determined deficiencies of                   
          $763,131 and $1,491,616 in the Federal estate tax of the estates            
          of decedents Duane B. Farnam (DBF Estate) and Lois L. Farnam (LLF           
          Estate), respectively.                                                      
               The issue for decision is whether, for purposes of the                 
          liquidity test of section 2057(b)(1)(C), decedents’ loans to                
          their family-owned corporation are to be treated as “interests”             
          in the corporation.                                                         
               Unless otherwise indicated, all section references are to              
          the Internal Revenue Code (Code) as in effect for the dates of              
          decedents’ deaths, and all Rule references are to the Tax Court             
          Rules of Practice and Procedure.1                                           

               The facts of this case have been submitted fully stipulated            
          under Rule 122 and are so found.                                            
               At the times of their deaths, decedents Duane B. Farnam and            
          Lois L. Farnam were residents of Otter Tail County, Minnesota.              
          At the time of filing the petition, decedents’ estates’ personal            
          representative resided in Fargo, North Dakota.                              

               1 Although decedents died in different years--2001 and                 
          2003--the relevant Code provisions for both years are in all                
          material respects the same.                                                 

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Last modified: March 27, 2008