Estate of Duane B. Farnam, Deceased, Mark D. Farnam, Personal Representative, and Estate of Lois L. Farnam, Deceased, Mark D. Farnam, Personal Representative - Page 5




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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