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interest, and Mark Farnam owned a 1-percent capital interest in
Duane LP.
At the time of her death in 2003, decedent Lois Farnam and
Mark Farnam each owned 50 percent of the 1,000 outstanding shares
of FGP voting common stock, and Mark Farnam continued to own all
of the 99,000 outstanding shares of FGP nonvoting common stock.
In addition, decedent Lois Farnam owned a 92.72-percent capital
interest in Lois LP, and Mark Farnam and his wife and two
children owned the remaining 7.28-percent capital interest in
Lois LP.
On behalf of the DBF and LLF Estates, there were timely
filed Federal estate tax returns on which were claimed qualified
family-owned business interest (QFOBI) deductions under section
2057 of $625,000 and $675,000, respectively. On the Federal
estate tax returns, the common stock in FGP and the FGP notes
decedents owned at the times of their deaths (directly and
through their controlled partnerships) were included in the
respective decedents’ gross estates and in the calculation of the
QFOBI 50-percent liquidity test of section 2057(b)(1)(C). The
parties have stipulated the values of decedents’ stock interests
in FGP and the values of decedents’ FGP notes.
On or about November 29, 2005, respondent issued statutory
notices of deficiency determining the above Federal estate tax
deficiencies and disallowing the claimed QFOBI deductions.
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Last modified: March 27, 2008