§20

In particular, they observe that Shepter was legislatively overruled, and they attempt to distinguish Bunting and Necaise on the ground that those cases did not involve inclusions ofgift tax under section 2035(b).

In light of the facially manifest intent in section 7520(b) that exceptions to the statute’s application be permitted, we have no basis for concluding that Congress meant to overrule this administrative and judicial precedent.

- 18 - CHABOT, J., concurring in the result: I do not agree with the majority's determination to overrule this Court's opinions in Estate of Robertson v.

§§ 2036(a)(2) and 2038 do not require inclusion of the policies’ cash-surrender values because D did not have any right, whether by herself or in conjunction with anyone else, to terminate the policies because only the irrevocable trust had that right. 4. Held, further, I.R.C. § 2703 applies only to property interests that D held at the time of her death. There were no restrictions on the split-dollar receivable, so I.R.C. § 2703 is inapplicable.

The operation ofthe net gift agreement can be distinguished from the operation ofthe New York statutes. The net gift agreement provided an enforcement mechanism to recoup the section 2035(b) estate tax incurred out of the property transferred.

1960), Brett says that "courts disfavor the application ofthe duty ofconsistency because ofthe inequity imposed upon a minor." But here, unlike the taxpayers in Ford, the minor--Brett--wasrepresented by a guardian ad litem, and that guardian was requiredto make a representation on the estate-tax return for the section 2032A election to be effective.

Lastly, the cases upon which respondent relies are inapposite.

2053(a)(3). The estate does not cite any authority that the amount ofa settlementpaymentto a beneficiary delineated in a testator's will is a deductible administration expense. Cf., e.g., sec. 20.2053- 3, Estate Tax Regs. In desperation, the estate cites Pitner v. United States, 388 F.2d 651 (5th Cir. 1967), where an estate was allowed to deduct certain litigation costs as administration expenses. Pitner is distinguishable because it involved a challenge by individuals "with no legitimate intere

Unlike the Gill children, Valerie Gill was not seeking to enforce the 2000 settlement agreement.

Unlike sec . 2013, sec .

Further, petitioner contends that section 2036(a) does not apply because Mrs .

As stated above, a finding to that effect would preclude the application of - 44 - section 2036; thus, the Empak stock decedent transferred to WCB Holdings would not be included his gross estate under section 2036(a). Moreover, if section 2036(a) does not apply to decedent's transfer, section 2035(a) cannot apply to the gifts he made of WCB Holdings class A governance units to CH Trust, GC Trust, and .QTIP Trust.

In Murray, unlike the instant case, the obligation was not limited to the “gross-up” tax of (original) section 2035(c), with its preordained inclusion amount and accompanying 3-year window of inclusion (indeed, that provision and the unified gift and estate tax system had yet to be enacted).

- 14 - 2041”.6 Section 2035(c) (unlike section 2035(a), for example), does not describe a “transfer” but merely requires that the gross estate be grossed up by the amount of gift taxes paid on gifts made within 3 years of the decedent’s death.7 The estate suggests that even though section 2035(c) does not explicitly refer to a “transfer”, it never

2036(a).6 Respondent determined and contends that assets that decedent conveyed to the partnership are includable in his estate under section 2036(a). Petitioner contends that section 2036(a) does not apply because decedent did not retain enjoyment (i.e., economic benefits) of the transferred property and that the transfer was for full and adequate consideration.

Respondent argues that decedent's situation is distinguishable from Propstra because all of the property to be aggregated in this case is included in decedent's estate. The FOH shares in the Harriett trust are included pursuant to section 2033, and FOH shares in the QTIP trust are included pursuant to section 2044.

2036(a), I.R.C., given the fact that D transferred the remainder interest for its fair market value. Held: D's gross estate includes the value of the stock at D's death, less the amount that D received for the remainder interest. The bona fide sale exception of sec. 2036(a), I.R.C., is inapplicable to the facts at hand.

In the Response to Cross-Motion for Partial Summary Judgment respondent states that the trustee annual commission, the accounting fees, and the legal fees as provided for in the settlement agreement “are deductible on the SK Trust’s Form 1041 when paid.” We express no view on the correctness of this statement.

But we disagree with respondent's assertion that "there is no ambiguity in the specific language at issue".

also argues that its position is supported by caselaw allegedly holding, in the estate’s words, that “a secondary or remote possibility that an estate might have personal liability for the amount of the mortgage was not enough to establish it as a claim against the estate under section 2053(a)(3).” We disagree with the estate’s contention that “a practical approach is mandated” in resolving the question at issue.

After concessions by the parties,2 the issues remaining for decision are the following: (1) whether the estate timely elected to use an alternate valuation date pursuant to section 2032 to value decedent’s gross estate; (2) whether the estate may exclude $200,000 from the value of property located at 90 and 90-A Industrial Park Road, Hingham, Massachusetts (Hingham Property), for a qualified conservation easement contribution; (3) whether the fair market value of the Hingham Pro

Held: Assuming there was a transfer of property under I.R.C. § 2519 when the marital trusts were terminated, E is not liable for gift tax under I.R.C. § 2501 because S received back the interests in property that she was treated as holding and transferring under I.R.C. §§ 2056(b)(7)(A) and 2519 and made no gratuitous transfer, as required by I.R.C.

On June 12, 2023, respondent filed an Amendment to Answer, in which he asserted that the proceeds of the Zurich Policies are includible in the gross estate pursuant to section 2031 and, in the alternative, section 2042(2).

Applicable Statute Pursuant to section 2001(a) tax may be imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.

§ 78u(d)(3)]; and d) prohibits Defendant, pursuant to Section 20(e) of the Securities Act [15 U.S.C.

THE VALUE OF THE ASSETS TRANSFERRED TO THE TRUSTEE DURING THE LIFETIME OF THE DECEDENT HAVE BEEN REPORTED, PURSUANT TO SECTION 2038 OF THE INTERNAL REVENUE CODE, ON SCHEDULE G * * *.

Exception to Section 2031--Alternate Valuation Date Pursuant to section 2032, property includible in the gross estate is included at its fair market value on the date ofthe decedent's death unless the executor elects the alternate valuation method.

MEMORANDUM FINDINGS OF FACT AND OPINION FOLEY, Judge: After concessions the issues for decision are the values, pursuant to section 2031, ofthree pieces offine artwork.¹ ¹Unless otherwise indicated, all section references are to the Intemal (continued...) SERVED Dec 22 2015 - 2 - [*2] FINDINGS OF FACT Bernice Newberger, a resident ofPalm Beach County, Florida, died in Chicago, Illinois, on July 28, 2009 (date ofdeath), and her wi

We hold that that estate is required under section 2044 to include in the value ofthat gross estate $607,927.51, the value on the applicable valuation date ofonly certain ofthe as- sets that that trust held on the date ofMr.

We hold that the interest expense is not deductible.

* * * Thus, ifdecedentpossessed at his death any incidents ofownership in the Reliastar policy, the entire $2,495,000 death benefit is includible in the value of the gross estate pursuant to section 2042(2).

- 13 - , Generally, applying section 2036 in the context ofa family limit d partnership raises a twofold problem for the marital deduction calculation.

Held: Different standards apply to including a. claim in favor of an estate in the gross estate and deducting a claim against an estate for estate tax purposes . Held, further, as demonstrated by the expert reports submitted on behalf of the estate, the value of the claim was too uncertain to be deducted based on estimates as of the date of death and must be deducted based on the ultimate outcome, in accordance with the regulation.

The issues for decision are whether: (1) The value of a personal residence transferred by Sylvia Riese SERVEDMar152011 - 2 - (decedent) to a qualified personal residence trust (QPRT) that terminated 6 months before decedent's death is included in the value of decedent's gross estate pursuant to section 2036;1 (2) investment management fees of $125,000 paid by the estate are deductible administrative expenses pursuant to section 2053; (3) accrued rent of $46,298 is deductible as a debt of decede

-6- Accordingly, we hold that the estate is not entitled to an administration expense deduction for .interestl~under section 2053 .

We hold, therefore, that the Hurfords were not entitled to any discounts because of the FLPs when they calculated the amount of the monthly annuity payments, and so no discounts apply when determining the amount now includable in the estate." C.

And it appearing that defendant receives and/or is entitled to receive monthly retired or retainer pay by virtue of his United States Navy retirement aforesaid and that complainant moves the Court to direct that the aforesaid $1,017.00 monthly payments to her pursuant to Section 20-107.3, Code of Virginia, be made direct from the United States Navy Finance Center or other appropriate U.S.

Applying the economic substance doctrine in this case on the basis of decedent's continuing control would be equivalent to applying section 2036(a) and including the transferred assets in decedent's estate.

After concessions,1 the issues for decision are: (1) Whether, despite the executor's failure to make the alternate valuation election pursuant to section 2032 within 1 year after the time prescribed by law (including extensions) for filing the Federal estate tax return, the value of the gross estate may be determined by valuing all the property included in the gross estate as of the alternate valuation date.2 We hold it may not.

On the return, the entire $2,482,719 sought by Exxon was deducted as a claim against the estate pursuant to section 2053(a)(3).

For its part, Treasury Regulation § 20.2010-2(a)(7)(i) pins the meaning of “complete and properly prepared” to (1) compliance with “the instructions issued for the estate tax return (Instructions for Form 706)” and (2) satisfaction of “the requirements of [Treasury Regulation] §§ 20.6018-2, 20.6018-3, and 20.6018-4.” Both parties focus on the former requirement. Form 706 includes various schedules related to different types of property: real estate (Schedule A); stock and bonds (Schedule B); mor

§ 2043(b)(1).6 The purpose of this provision “was to eliminate a particular form of estate tax avoidance which involved the contractual conversion of a wife’s dower (or other property rights she may have as surviving spouse) into a deductible claim against the gross estate.” Estate of Glen v. Commissioner, 45 T.C. 323, 333 (1966).7 In sum, a spouse’s inheritance rights in the decedent’s property do not constitute consideration under section 2053(c)(1)(A). Estate of Rubin v. Commissioner, 57 T.C.

617 (1973), but we find it appropriate to distinguish this case. In Estate ofWycoffv. Commissioner, 506 F.2d at 1146, the decedent's will created two trusts, one in favor ofhis wife and the other for the benefit ofhis son. The decedent directed that Federal estate and State death taxes be paid out ofthe portion ofhis estate that was not in the marital trust; but at the same time, he granted the executor discretion to pay these taxes out ofthe marital trust ifthe executor considered it prudent to

20.2010-2T(d), Temporary Estate Tax Regs., 77 Fed. Reg. 36159 (June 18, 2012); sec. 20.2010-3T(d),TemporaryEstate Tax Regs., 77 Fed. Reg. 36161 (June 18, 2012). Finally, section 7602 gives the Commissioner broad discretion to examine a range ofmaterials to "ascertain[] the correctness ofany return". Under section 7602(a)(1) Congress gave the C

2036. TRANSFERS WITH RETAINED LIFE ESTATE. (a) General Rule.--The value ofthe gross estate shall include the value ofall propertyto the extent ofany interest therein ofwhich the decedent has at any time made a transfer (except in case ofa bona fide sale for an adequate and full consideration in money or money's worth), * * * under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death-- (

2036. TRANSFERS WITH RETAINED LIFE ESTATE. (a) General Rule.--The value ofthe gross estate shall include the value ofall propertyto the extent ofany interest therein ofwhich the decedent has at any time made a transfer (except in case ofa bona fide sale for an adequate and full consideration in money or money's worth), * * * under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death-- (

We have held that the bona fide sale exception in section 2036(a) is satisfied in the context ofa family limited partnership where the record establishes the existence ofa legitimate and significant nontax reason for creating the family limited partnership, and the transferors received partnership interests proportionate to the value ofthe property transferred. See, e.g., Estate ofStone v. Commissioner, * * * [T.C. Memo. 2003-309]. The objective evidence must indicate that the nontax reason was

2031(a). The value ofthe gross estate includes the value ofsuch property, to the extent ofthe decedent's interest in it, at the time ofdeath. Sec. 2033. Section 2036 is intended to include in a decedent's gross estate inter vivos transfers that were testamentary in nature. United States v. Estate ofGrace, 395 U.S. 316, 320 (1969); Estate ofBongard v. Commissioner, 124 T.C. 95, 112 (2005). Accordingly, a decedent's gross estate includes the value ofall property that the decedent transferred but r

2012-48, slip op. at 18. B. Section 2036(a) Conclusion We have found that decedent's transfer ofproperty to the PFLLC was a bona fide transfer and that decedent received full and adequate consideration from the PFLLC as a result ofthe transfer. Because decedent's transfer was bona fide and for adequate and full consideration, section 2036(a) is inapplicable to the transfer and does not operate to include the value ofthe property in the value of decedent's gross estate. "[I]fsection 2036(a) does

2012-48, slip op. at 18. B. Section 2036(a) Conclusion We have found that decedent's transfer ofproperty to the PFLLC was a bona fide transfer and that decedent received full and adequate consideration from the PFLLC as a result ofthe transfer. Because decedent's transfer was bona fide and for adequate and full consideration, section 2036(a) is inapplicable to the transfer and does not operate to include the value ofthe property in the value of decedent's gross estate. "[I]fsection 2036(a) does

The estate contends that it fully complied with the requirements set forth in section 6166 and, invokingthe doctrine ofsubstantial compliance, that it substantially complied with the requirements set forth in section 20.6166-1, Estate Tax Regs. Therefore, in the estate's view, because it timely made an election under section 6166, it should be allowed to pay its estate tax in installments pursuant to section 6166. Respondent opposes the estate's cross-motion, arguing that the doctrine of substan

Section 2036(a) includes the value ofassets in a decedent's gross estate when: (1) decedent made an inter vivos transfer ofproperty; (2) decedent's transfer was not a bona fide sale for adequate and full consideration; and (3) - 20 - [*20] decedent retained an interest or right in the transferred propertythat she did not relinquish before her death. See Estate ofBongard v. Commissioner, 124 T.C. 95, 112 (2005). In addition, section 2035(a) provides that a decedent's gross estate includes the va

Liljestrand's expenses for the years 1999, 2000, 2001, 2002, and 2003 were $81,479, $122,801, $96,807, $180,563, and $270,553, respectively. During these years Dr. Liljestrand's earnings, not including distributions from PLP, totaled $26,150, $120,382, $30,652, $27,758, $25,985, respectively. Without the partnership distributions Dr. Liljestrand would have been unable to cover his personal expenses. A taxpayer's financial dependence on distributions from the partnership suggests that the transfe

The only difference that we can see between Walshire and this case is that Walshire disclaimed a remainder interest and kept the income, while Hamilton tried to do the reverse--but no matter how you slice it, the cases are indistinguishable .12 We are left with the conclusion that her disclaimer is "not a qualified disclaimer with respect to any portion of the property ." Sec . 25 .2518-2(e)(3), Gift Tax Regs . The dissent reaches a different result by focusing on a different sort of property--t

Mirowski did not retain a right described in section 20 36(a)(2) with respect to the respective 16-percent interests in MFV that she gave to her daughters' trusts .

20.2041-3(f), Example (3), Estate Tax Regs. In that situation, the entire corpus of the trust as of the time of death is includable in the decedent’s gross estate under section 2041. Secs. 20.2041-1(b)(1), 20.2041- - 61 - 3(f), Example (3), Estate Tax Regs. Decedent had an unrestricted power to distribute the corpus of the Marital Fund to her

20.2041-3(f), Example (3), Estate Tax Regs. In that situation, the entire corpus of the trust as of the time of death is includable in the decedent’s gross estate under section 2041. Secs. 20.2041-1(b)(1), 20.2041- - 61 - 3(f), Example (3), Estate Tax Regs. Decedent had an unrestricted power to distribute the corpus of the Marital Fund to her

ent, express or implied, that the possession or enjoyment of, or the right to the income from, the assets would be for decedent’s pecuniary benefit. See Guynn v. United States, supra at 1150; Estate of Rapelje v. Commissioner, 73 T.C. 82, 86 (1979); sec. 20.2036-1(a) and (b)(2), Estate Tax Regs.; see also United States v. Byrum, 408 U.S. 125, 145, 150 (1972) (in the context of section 2036(a)(1), the word “enjoyment” denotes the receipt of a “substantial present economic benefit” as opposed to “

anding or agreement, express or implied, that the possession or enjoyment of the residence would be for her pecuniary benefit. See Guynn v. United States, 437 F.2d 1148, 1150 (4th Cir. 1971); Estate of Rapelje v. Commissioner, 73 T.C. 82, 86 (1979); sec. 20.2036-1(b)(2), Estate Tax Regs.; see also United States v. Byrum, 408 U.S. 125, 146 n.28 (1972) (in the context of section 2036(a)(1), the word “enjoyment” denotes the receipt of a substantial present economic benefit); Estate of Maxwell v. Co

greement are includable in the gross estate pursuant to sec. 2033, I.R.C. Held, further, for purposes of inclusion in the gross estate, the annuities are to be valued under sec. 7520, I.R.C., in accordance with the actuarial valuation methodology of sec. 20.2031-7(d), Estate Tax Regs. Held, further, under the circumstances present in this case, expenditures incurred for a funeral luncheon are not properly deductible as funeral expenses under sec. 2053(a)(1), I.R.C. SERVED .00T -- 5 2006 - 2 - Jo

as that the charitable remainder interest in a split-interest trust be "ascertainable"; i.e., severable from the noncharitable interest. H. Rept. 98-432 (Part 2), at 1518 (1984); see also Ithaca Trust Co. v. United States, 279 U.S. 151, 154 (1929); sec. 20.2055-2(a), Estate Tax Regs. - 11 - The legislative history of section 2055(e)(3) indicates that Congress intended a more liberal reformation rule for trusts where the creator had made a bona fide attempt to comply with the provisions of the 1

241, 252 (1972) (citing section 20.2039-1(a), Estate Tax Regs.).

; i.e., 14,500 of the 14,504 limited partnership units (99.97242 percent). To constitute a bona fide sale for adequate and full consideration, the transfer of the property must be made in good faith. Estate of Thompson v. Commissioner, supra at 383; sec. 20.2043-1(a), Estate Tax Regs. Such a sale requires that the transfer be made for a legitimate nontax purpose. Estate of Bongard v. Commissioner, 124 T.C. ___, ___ (2005) (slip op. at 39). Transactions between family members are subject to heigh

erefrom. -40- Regulations further explain that "An interest or right is treated as having been retained or reserved if at the time of the transfer there was an understanding, express or implied, that the interest or right would later be conferred." Sec. 20.2036-1(a), Estate Tax Regs. Given the language used in the above-quoted provisions, it has long been recognized that "The general purpose of this section is 'to include in a decedent's gross estate transfers that are essentially testamentary'

20.2041-1(c), Estate Tax Regs. II. Did Decedent Possess a General Power of Appointment Over the Marital Trust Property? A. The Parties’ Positions As discussed below, the court of special appeals has ruled that Mr. Posner’s will granted decedent no testamentary power of appointment over the marital trust property. Respondent does not dispute th

A QTIP interest must meet the requirements of section 20.2056(b)-5(f), Estate Tax Regs.

or implied agreement at the time of the transfer that the transferor will retain the present economic benefits of the property, even if the retained right is not legally enforceable. See Estate of Reichardt v. Commissioner, 114 T.C. 144, 151 (2000); sec. 20.2036-1(a), Estate Tax Regs. In deciding whether there was an implied agreement, the Court considers all of the facts and circumstances surrounding the transfer and the subsequent use of the property. See Estate of Reichardt v. Commissioner, s

§ 20.2036-1(a) (cross-referencing Treas. Reg. § 20.2043-1(a)). The average 43-percent valuation discounts claimed on Decedents’ estate tax returns, and the stipulated discounts to be applied in 70Respondent also relies on Estate of Reichardt v. Commis- sioner, 114 T.C. 144 (2000), and Estate of Thompson v. Commis- sioner, T.C. Memo. 2002-246, which

§ 20.2036-1(a) (cross-referencing Treas. Reg. § 20.2043-1(a)). The average 43-percent valuation discounts claimed on Decedents’ estate tax returns, and the stipulated discounts to be applied in 70Respondent also relies on Estate of Reichardt v. Commis- sioner, 114 T.C. 144 (2000), and Estate of Thompson v. Commis- sioner, T.C. Memo. 2002-246, which

nd in all events. [Emphasis added.] Regulations promulgated pursuant to section 2056(b)(5) require the surviving spouse to be entitled for life to all of the income from either the entire interest or from a specific portion of the entire interest.5 Sec. 20.2056(b)-5(a)(1), Estate Tax Regs.; see Estate of Wisely v. United States, 703 F. Supp. 474, 476 (W.D. Va. 1988). Moreover, the income must be payable to the surviving spouse annually or at more frequent intervals. Sec. 20.2056(b)-5(a)(2), Esta

2056(b)(1). Section 2056(b)(7) provides an exception to this general rule and allows a marital deduction for QTIP even though the surviving spouse receives only an income interest and has no control over the ultimate disposition of the property. The value of QTIP is included in a surviving spouse’s estate pursuant to section 2044(a). In the legislative history accompanying the enactment of sections 2044 and 2056(b)(7), the House Ways and Means Committee noted that prior to the enactment of secti

20.2036-1(a)(i), Estate Tax Regs. Given the language used in the above-quoted provisions, it has long been recognized that “The general purpose of this section is ‘to include in a decedent’s gross estate transfers that are essentially testamentary’ in nature.” Ray v. United States, 762 F.2d 1361, 1362 (9th Cir. 1985) (quoting United States v.

20.2040-1, Estate Tax Regs. Section 2040 creates a rebuttable presumption that the entire value of the jointly owned property is includable in the decedent's estate with the burden falling upon the estate to show the consideration. Hahn v. Commissioner, 110 T.C. 140, 144 (1998); Estate of Heidt v. Commissioner, 8 T.C. 969 (1947), affd. per cur

ly enforceable. See Guynn v. United States, 437 F.2d 1148, 1150 (4th Cir. 1971); Estate of McNichol v. Commissioner, 265 F.2d 667, 671 (3d Cir. 1959), affg. 29 T.C. 1179 (1958); Estate of Reichardt v. Commissioner, 114 T.C. 144, 151 (2000); see also sec. 20.2036-1(a) Estate Tax Regs. The existence of such an implied agreement or understanding can be inferred from the facts and circumstances surrounding both the transfer itself and the subsequent use of the property. Estate of Reichardt v. Commis

rcent) of the Eckell, Sparks settlement proceeds payable to the Glovers pursuant to the plaintiffs' agreement is deductible (in determining decedent's taxable estate) either as an administration expense within the meaning of section 2053 (a) (2) and section 20.2053-3(c) (3), Estate Tax Regs., or as a claim against the estate within the meaning of section 2053(a) (3) and section 20.2053-1(a) (1), Estate Tax Regs.

Comparison of Nonannuity and Annuity Characteristics In seeking to ascertain what might distinguish notes receivable, leasehold payments, patent rights, and royalties from the annuities previously examined, we look first at notes receivable. Furthermore, our review thereof convinces us that these assets differ from annuities in a fundamental respect. It is the concept of interest which renders valuation of a note a very different enterprise from valuation of an annuity. Because an annuity involv

life insurance proceeds were remitted to his children. Held: The policies of life insurance constitute community property under Louisiana law such that only one-half of the proceeds therefrom is includable in H’s gross estate. Sec. 2042(2), I.R.C.; sec. 20.2042- 1(c)(1), (5), Estate Tax Regs. Raymond P. Ladouceur, for petitioner. Susan Smith Canavello, for respondent. - 2 - MEMORANDUM OPINION NIMS, Judge: Respondent determined a Federal estate tax deficiency in the amount of $82,997 for the est

estate less prescribed deductions. See sec. 2051. All property interests owned by the - 60 - decedent at death are included in the gross estate; the value of the gross estate generally is determined as of the date of death. See secs. 2031(a), 2033; sec. 20.2031-1(b), Estate Tax Regs. Fair market value is the standard for determining value of transfers of property subject to Federal estate tax. See United States v. Cartwright, 411 U.S. 546, 550 (1973). Fair market value is “the price at which the

20.2036-1(a)(i), Estate Tax Regs. - 9 - Given the language used in the above-quoted provisions, it has long been recognized that section 2036 “describes a broad scheme of inclusion in the gross estate, not limited by the form of the transaction, but concerned with all inter vivos transfers where outright disposition of the property is delayed

estate less prescribed deductions. See sec. 2051. All property interests owned by the - 60 - decedent at death are included in the gross estate; the value of the gross estate generally is determined as of the date of death. See secs. 2031(a), 2033; sec. 20.2031-1(b), Estate Tax Regs. Fair market value is the standard for determining value of transfers of property subject to Federal estate tax. See United States v. Cartwright, 411 U.S. 546, 550 (1973). Fair market value is “the price at which the

20.2032A-4, Estate Tax Regs. Held: P may not value its elected properties under the valuation formula of sec. 2032A(e)(7), I.R.C. Held, further, by reason of sec. 20.2032A-4, Estate Tax Regs. (which provides that if an executor does not identify comparable property and cash rentals as required by sec. 2032A(e)(7), I.R.C., all specially valued

on I. Overview of Section 2032A–-Special Use Valuation Generally, a decedent's gross estate includes the fair market value of the decedent's interest in all property in which the decedent owned an interest at the time of death. See secs. 2031, 2033; sec. 20.2031-1(b), Estate Tax Regs. However, in the case of certain real property used by the decedent or a member of the decedent's family for farming or in a closely held business, section 2032A allows the decedent's personal representative to elec

2031, I.R.C., and sec. 2040, I.R.C., provide an explicit approach to valuing joint tenancy. Fractional interest discounts and lack of marketability discounts are inapplicable to the valuation of joint tenancy under sec. 2040(a), I.R.C. Held, further: P is liable for the addition to tax for late filing under sec. 6651(a), I.R.C. Lance M. Weagant and Randall D. Fowler, for petitioner. Dwight M. Montgomery, for respondent. WRIGHT, Judge: Respondent determined a deficiency of $154,545 in petitioner'

20.2055-2(a) and (b), Estate Tax Regs.] These two requirements, the "presently ascertainable" and "remote possibility" requirements, were approved by the Supreme Court in Commissioner v. Estate of Sternberger, 348 U.S. 187 (1955) (expressly approving a prior version of these regulations) and by the Court of Appeals of the Fifth Circuit in Flor

20.2033-1(a), Estate Tax Regs. Thus, the - 7 - question presented by petitioner's motion is whether, at the time of her death, decedent possessed a beneficial interest in the property transferred by Dilworth, assuming for present purposes that the transfers were voidable. In Morgan v. Commissioner, 309 U.S. 78, 80 (1940), the Supreme Court st

ION A. Background A decedent's estate includes the date-of-death value of property he or she owns jointly, except for any part of the value that the estate shows is attributable to consideration provided by the surviving joint tenant. Sec. 2040(a);3 sec. 20.2040-1, 3 Sec. 2040(a) provides in part: (a) General Rule.--The value of the gross estate shall include the value of all property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any o

state by $5,108,782 or by $1,678,237, and we shall deny respondent’s motion. OPINION For Federal estate tax purposes, property is generally included in a decedent’s gross estate at its fair market value on the date of decedent's death. Sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is defined generally as the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable

nsideration for claims.--The deduction allowed by this section in the case of claims against the estate, * * * shall, when founded on a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth; * * * Section 2053(c)(1)(A) is mirrored by the provisions of section 20.2053-4, Estate Tax Regs.

20.2031-7A(d)(6), Estate Tax Regs. 5 Decedent had eight grandchildren, and Mrs. Nathan had two grandchildren. -7- added such property shall be covered by the provisions hereof the same as if originally hereunder. II. Dispositive Provisions. The Trustee shall hold, manage, invest and reinvest the assets of the trust, collect the rents, interes

Section 20.2031-1(b), Estate Tax Regs., defines fair market value as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to - 17 - buy or to sell and both having reasonable knowledge of relevant facts.” Section 2031(b), in particular, addresses the valuation of stock

20.2041-1(b), Estate Tax Regs. The possession of a general power of appointment is subjected to the estate tax, whether or not the power is exercised, and the exercise or release of such power during the holder's life is subjected to the gift tax. Estate of Kurz v. Commissioner, 101 T.C. 44, 53 (1993), - 6 - supplemented and reconsideration d

est in it at the time of her death. Sec. 2033. "The amount of cash belonging to the decedent at the date of his death, whether in his possession or in the possession of another, or deposited with a bank, is included in the decedent's gross estate." Sec. 20.2031-5, Estate Tax Regs. State law determines the extent of a decedent's interest in property. Burnet v. Harmel, 287 U.S. 103, 110 (1932). Petitioner contends that decedent intended to make $10,000 gifts to family members and that the power of

Generally, section 2053(a)(2)2 authorizes an estate to deduct administration expenses that are allowable by the law of the jurisdiction in which the estate is being administered.3 Section 20.2053-3(a), Estate Tax Regs., provides that expenses actually and necessarily incurred are expenses "in the collection of assets, payments of debts, and distribution of property to the persons entitled to it." As a threshold matter, we will look to Tennessee law, the State where decedent's estate was administ

"value" means fair market value, which is "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Sec. 20.2031-1(b), Estate Tax Regs. The standard is objective, using a purely hypothetical willing buyer and seller. Propstra v. United States, 680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990); Est

Section 20 .2036-1(c)(1)(i), Estate Tax Regs ., further explains : "An interest or right is treated as having been retained or reserved if at the time of the transfer there was an understanding, express or implied, that the interest or right would later be conferred ."" "The general purpose of * * * [section 20361 is `to include in a decedent's gro

Section 20 .2036-1(c)(1)(i), Estate Tax Regs ., further explains : "An interest or right is treated as having been retained or reserved if at the time of the transfer there was an understanding, express or implied, that the interest or right would later be conferred ."" "The general purpose of * * * [section 20361 is `to include in a decedent's gro

546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.).

20.2031-2(f), Estate Tax Regs. Petitioner has the burden of proving that respondent's determinations in the notice of deficiency are erroneous.7 Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). 7 We need not decide whether to shift the burden of proof to respondent or modify it, as petitioner contends because we would reach the same

- 13 - administration expense under section 20.2053-3(a), Estate Tax Regs., and (2) an allowable expense under Ohio probate law (two- part test).

In support of that argument, petitioner cites section 20.2056(e)-2(d)(2), Estate Tax Regs.

te filed a petition with this Court on June 28, 2004. OPINION For Federal estate tax purposes, property includable in the gross estate is generally included at its fair market value on the date of the decedent’s death. See secs. 2031(a) and 2032(a); sec. 20.2031-1(b), Estate Tax Regs.4 Fair market value is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of r

top penalties from accruing, they were not irrelevant). - 8 - To satisfy “undue hardship”, it must appear that substantial financial loss would result to the taxpayer from making payment by the due date. Sec. 1.6161-1(b), Income Tax Regs.; see also sec. 20.6161-1(a)(2)(ii), Estate Tax Regs. Further, if a market exists, the sale of property at the current market price is not ordinarily considered an undue hardship. Sec. 1.6161-1(b), Income Tax Regs.; see also sec. 20.6161-1(a)(2)(ii), Estate Tax

tion and application of those principles to the facts. We first review the legal principles. For Federal estate tax purposes, assets are includable in a decedent’s gross estate at fair market value determined at the date of death. See sec. 2031(a);5 sec. 20.2031-1(b), Estate Tax Regs. Fair market value is “‘the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of r

20.2031-1(b), Estate Tax Regs.] 2. The Experts Each party submitted an expert report, supported by extensive testimony, that selected a different market in which to value the collection. The experts’ contradictory assumptions and their differing conclusions about which market is relevant and the state of those different markets in 1985 partly

Decedent's estate’s tax return included a Schedule A-1 "Section 2032A Valuation," on which Executrix made a protective election pursuant to section 20.2032A-8(b), Estate Tax Regs.2 The estate tax return was subsequently selected for audit.

20.2031- 1(b), Estate Tax Regs. An exception to the general valuation rule exists when the property in question is subject to an enforceable restrictive agreement, such as a buy-sell arrangement. See, e.g., St. Louis County Bank v. United States, 674 F.2d 1207, 1210 (8th Cir. 1982). For a restrictive agreement to control value for Federal esta

re is no mutual assent. According to the Restatement, we determine each party’s attached meaning on the basis of an objective standard, and the parties’ subjective intentions or understandings do not govern the question of mutual assent. Restatement § 20 cmt. b. 8 In practice the exchange of letters did not end negotiations over the amounts of the deductions for out-of-pocket costs. After the exchange of substantially similar letters in six other Ornstein-Schuler cases, the parties increased the

full consideration in money or money’s worth * * *.” (Emphasis added.) The regulation directs us to apply State law in deciding whether a debt is “payable out of property subject to claims and * * * allowable by the law of the jurisdiction * * *.” Sec. 20.2053-1(a)(1), Estate Tax Regs; see also Estate of Lazar v. Commissioner, 58 T.C. 543, 552 (1972). The Commissioner’s first attack on the bona fides of the loan is an argument that Clyde never had control over the $1 million to begin with. He c

property taxes are not deductible by an estate unless the taxes are an enforceable obligation of the decedent at the time of her death . See also sec . 20 .2053-6(b), Estate Tax Regs . 8 - Accordingly, no deduction is allowed. Sec . 2053(c)(1)(B) ; sec. 20 .2053-6(b), Estate Tax Regs . IV . Deduction of Debt Owed to Mr . Stewart Is Not Allowed The estate contends that it is entitled, pursuant to section 2053(a)(3), to deduct a debt owed to Mr . Stewart relating to the purported reconciliation ag

serted at trial. Respondent has indicated hîs intent to deny any such attempt. This dispute raises the question of when the 60-day period begins to run for the estate to file a notice of election, and turns on the phrase "as finally . determined" in sec. 20.2032A-8(b), Estate Tax Regs. Specifically, respondent argues that the value finally determined is his determination in the notice of deficiency, and the estate argues that it is this Court's determination of the property's value. This issue w

20.2031- 1(b), Estate Tax Regs. The determination of the fair market value of property is a factual determination, and the trier of fact must weigh all relevant evidence of value and draw appropriate inferences. Helvering v. Natl. Grocery Co., 304 U.S. 282, 294 (1938); Symington v. Commissioner, 87 T.C. 892, 896 (1986); sec. 20.2031-1(b), Esta

241, 252 (1972) (citing section 20.2039-1(a), Estate Tax Regs.).

It is respondent’s position that the estate is entitled to deduct under section 2053 personal representative’s commis- sions of $11,607.18 In support of its position under section 2053, the estate argues that, under section 20.2053-3(b), Estate Tax Regs.,19 the June 29, 2001 order of the Orphans’ Court, which allowed $32,000 17See supra note 10.

esiduary clause in her will. In that event, the estate would concede that the portion of that principal subject to that power is includible in decedent’s gross estate under sec. 2041(a)(1). The estate’s position with respect to Pennsylvania law, see sec. 20.2041-1(d), Estate Tax Regs., accurately reflects that under Pennsylvania law an individual who has a general power of appointment may exercise that power through the residuary clause in that individual’s will. See 20 Pa. Cons. Stat. Ann. sec.

jurisdiction where the estate is being administered, sec. 2053(a)(2), and which are ac ually and necessarily incurred in administering a decedent's estate, Estate of Grant v. Commissioner, 294 F.3d 352, 353 (2d Cir. 2002), affg. T.C. Memo, 1999-396; sec. 20.2053-3(a), Estate Tax Regs.' Interest on funds borrowed to pay taxes or other debts of the estate while the estate is illiquid (i.e., while the estate 9 Sec. 20.2053-3(a), Estate Tax Regs., provides in part: The amounts deductible from a dece

dified agreement is disregarded for purposes of determining the value of D’s shares for Federal estate tax purposes because D had the unilateral ability to modify the agreement, rendering the agreement not binding during D’s lifetime, as required by sec. 20.2031-2(h), Estate Tax Regs. Held, further: Sec. 2703, I.R.C., applies to the modified agreement because the 1996 modification, which occurred after the effective date of sec. 2703, I.R.C., was a substantial modification. Held, further: The mo

A QTIP interest must meet the requirements of section 20.2056(b)-5(f), Estate Tax Regs.

20.2031-1(b), Estate Tax Regs. The fair market value of property is the price at which the property would change hands between a willing buyer and a willing seller, neither being under a - 15 - compulsion to buy or to sell and both having reasonable knowledge of relevant facts. Id.; see United States v. Cartwright, 411 U.S. 546, 551 (1973). F

al”. Sec. 2031(a). The relevant value is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Sec. 20.2031-1(b), Estate Tax Regs; see United States v. Cartwright, 411 U.S. 546, 551 (1973). See generally Rev. Rul. 59-60, 1959-1 C.B. 237. The fair market value of property reflects its highest and best use on the valuation date. Mitchell v. Unite

20.2055-3(a)(1), Estate Tax Regs. If section 2055(c) applies, an interrelated calculation is. required to determine the amount of the allowable charitable deduction. See sec. 20.2055-3(a)(2), Estate Tax Regs. Generally, the manner in which death taxes are apportioned to the assets that compose a decedent's gross estate is governed by State law

In particular, we must decide whether a limited partnership’s right to receive 19 annual installment payments of lottery winnings must be valued in accord with the private annuity tables in section 20.2031-7, Estate Tax Regs.

t which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Estate of Magnin v. Commissioner, T.C. Memo. 1996-25; sec. 20.2031-1(b), Estate Tax Regs. 9Sec. 2036(a) provides, in pertinent part: (continued...) - 16 - decedent was part of “a bona fide sale for an adequate and full consideration in money or money’s worth”, then section 2036(a) will not require inclu

20.2031-1(a), Estate Tax Regs. Under section 2033, all property beneficially owned by the decedent at the time of death will be included in the gross estate. See sec. 20.2033-1(a), Estate Tax Regs. Section 2044 includes in the gross estate the value of all qualified terminable interest property (QTIP); i.e., property in which the decedent had

Section 20.2056(d)- 2(b), Estate Tax Regs., provides in this regard: If an interest in property passes from a decedent to a person other than the surviving spouse, and the interest is created in a transfer made after December 31, 1976, and-- - 30 - (1) The person other than the surviving spouse makes a qualified disclaimer with respect to such int

21 - OPINION I. Value of Decedent’s Real Property The value of decedent’s gross estate includes the fair market value of the real property that decedent owned at her death. See sec. 2031(a);12 United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. The parties have not agreed on the fair market value of decedent’s real property, and so we have to find the fair market value. See Buffalo Tool & Die Manufacturing Co. v. Commissioner, 74 T.C. 441, 451-452 (1980). G

s a recipient pursuant to section 2055(a)(2). See Estate of Smith v. Commissioner, T.C. Memo. 1961-242. It must also be organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. See sec. 2055(a)(2); sec. 20.2055-1(a)(2), Estate Tax Regs.; see also Estate of Smith v. Commissioner, supra. It is well established that an estate is not entitled to a deduction for a bequest made to a nonprofit cemetery unless the cemetery is devoted to an exclusively

operty would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts. Sec. 2031; United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. The partnership interests that were held by the revocable trust are included in decedent's gross estate pursuant to section 2038, and the partnership interests that were held by the QTIP trusts are included in deced

s, or devises reduced by the amount of such taxes. "Section 2055(c) in effect provides that the deduction is based on the amount actually available for charitable uses, that is, the amount of the fund remaining after the payment of all death taxes." Sec. 20.2055-3, Estate Tax Regs. Generally, "Congress intended that the federal estate tax should be paid out of the estate as a whole, and that the applicable state law as to the devolution of property at death should govern the distribution of the

20.2056(b)-4(a), Estate Tax Regs. (in determining the value of an interest in property passing to the spouse for purposes of the marital deduction, account must be taken of the effect of any material limitations upon the surviving spouse's right to income from the property);10 sec. 20.2056(b)-5(a), Estate Tax Regs. (in order for an interest in

Section 20.2053-8, Estate Tax Regs., provides in pertinent part with respect to the deductibility of expenses in administering property not subject to claims: Usually, these expenses are incurred in connection with the administration of a trust established by a decedent during his lifetime. * * * (b) These expenses may be allowed as deductions only

20.2053-4, Estate Tax Regs.] - 6 - Unpaid income taxes, whether or not determined as of the date of death, are deductible if they are on income properly includable in an income tax return of the decedent for a period before his or her death. See Schatzinger v. Commissioner, 12 B.T.A. 1353 (1928); sec. 20.2053-6(f), Estate Tax Regs. Deduction

neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." United States v. Cartwright, 411 U.S. 546, 551 (1973); Collins v. Commissioner, 3 F.3d 625, 633 (2d Cir. 1993), affg. T.C. Memo. 1992-478; sec. 20.2031-1(b), Estate Tax Regs. Second, where shares of stock are the property being valued, we look to whether the stock is publicly traded. If it is, then: (1) The price at which the stock is sold on a stock exchange or on the over-the-counter

Section 20.2053-3(a), Estate Tax Regs., provides the following interpretation of the above-stated requirement: The amounts deductible from a decedent's gross estate as “administration expenses” * * * are limited to such expenses as are actually and necessarily incurred in the administration of the decedent’s estate; that is, in the collection of as

uted in money or money's worth by the surviving joint tenant, then the part of the value of the property that is proportionate to such consideration is not included in decedent's gross estate. Estate of Anderson v. Commissioner, T.C. Memo. 1989-643; sec. 20.2040- 1(a)(2), Estate Tax Regs. Petitioner first argues that Ms. Friedeberg contributed consideration in the form of "money" to the value of the assets 6In 1976, subsec. (b) of sec. 2040 was added to the Code by sec. 2002(c)(1) of the Tax Ref

xpense deduction in its entirety, on the grounds that Georgia law requires prior court approval for the executor to borrow funds and that the interest expense was not "necessarily" incurred for the administration of the estate within the meaning of sec. 20.2053-3, Estate Tax Regs. R accepted the FMV of CMP as reported on the original estate tax return. 1. Held: P failed to supply the information and documentation necessary under sec. 2032A(e)(7)(A) and secs. 20.2032A-4(b)(2) and -8(a)(3), Estate

In this connection, it is of no help to petitioner to cite or rely on section 20.2042-1(b)(2), Estate Tax Regs.1 This regulation presupposes that under controlling local law, one-half of the proceeds of community property life insurance belongs to the spouse and not to decedent, so that only one-half of such proceeds is includable in the taxable estate.

Section 20.2053-4, Estate Tax Regs., provides that "The amounts that may be deducted as claims against a decedent's estate are such only as represent personal obligations of the decedent existing at the time of his death * * * Only claims enforceable against the decedent's estate may be deducted." Section 20.2053-1(b)(3), Estate Tax Regs., disallow

546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.).

20.2053-3(a), Estate Tax Regs. To be deductible under section 2053(a)(2), the administration expense must be allowable under (1) local law and (2) the regulations. Estate of Reilly v. Commissioner, 76 T.C. 369, 372 (1981); Estate of Smith v. Commissioner, 57 T.C. 650, 661 (1972), affd. 510 F.2d 479 (2d Cir. 1975); Estate of Love v. Commissione

As required by section 20.2032A-8(c)(1), Estate Tax Regs., the Agreement designated an agent, C.

The Petitioner claims that such amount is deductible as attorney fees, as provided in section 20.2053-3(c) of the Estate Tax Regulations.

which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. In determining the fair market value of property includable in a decedent's gross estate, we are to consider all relevant facts and circumstances. Cartwright v. United States, 457 F.2d 567, 571 (2d Cir. 1972), affd

20.2053-4, Estate Tax Regs. Petitioner bears the burden of proof. Rule 142(a). In support of its claim, petitioner produced a copy of a document entitled "SUBSCRIPTION AGREEMENT". It provided as follows: I Bonnie J. Harden agree upon demand at any time after January 1, 1989 to invest $300,000.00 (Three Hundred Thousand Dollars) in USM Funding

20.2056(a)-1(b), Estate Tax Regs. Item (1) is not in dispute, and only petitioner has addressed item (4), which we need not address for the reason stated below. Deductions are a matter of legislative grace; petitioner has the burden of showing that it is entitled to any deduction claimed. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1

Govern", ultimately filed the Federal estate tax return for decedent's estate, Form 706, as the executor "in fact" pursuant to section 2203 and section 20.6018- 2, Estate Tax Regs.

The policy behind the marital deduction is that property passes untaxed from the first spouse to die to the surviving spouse but is then included in the estate of the surviving spouse. See Estate of Letts v. Commissioner, 109 T.C. 290, 295 (1997), aff’d, 212 F.3d 600 (11th Cir. 2000) (unpublished table decision). The marital dedu

If a decedent made an inter vivos transfer of property (other than a bona fide sale for adequate and full consideration) and retained specific rights or interests in the property that were not relinquished until death, the full value of the transferred property generally is included in the gross estate. I.R.C. § 2036(a).9 The purpose o

§ 2461(a), which expressly provides that “[w]henever a civil fine, penalty or pecuniary forfeiture is prescribed for the violation of an Act of Congress without specifying the mode of recovery or enforcement thereof, it may be recovered in a civil action.” The section 6038(b)(1) penalty is a civil penalty prescribed for a violation of sec

21 [*21] Section 2031 and regulations thereunder provide general rules for property valuation for estate tax purposes, though the same valuation rules apply to income tax cases such as this. See Philip Morris, Inc. & Consol. Subs. v. Commissioner, 96 T.C. 606, 628 (1991), aff’d, 970 F.2d 897 (2d Cir. 1992). When a market valuation

§ 20.2031- 1(b); Rev. Rul. 59-60, § 2.2, 1959-1 CB 237, 237. Respondent contends that in the opinion of his retained expert witness the fair market value of NPA, LLC as of the transaction date was $52,463,722. Respondent disputes the testimony of petitioner’s expert and further avers that Mr. Landy lacked knowledge of the value of his business, per

Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 20 [*20] 7502(c)(1)(A) to a service of a designated PDS, which is substantially equivalent to United States registered or certified mail.

ecovery or enforcement thereof, it may be recovered in a civil action.” Here, the section 6038(b) penalties at issue are prescribed for the 8 violation of section 6038(a)(1) and (2), which was enacted by the Revenue Act of 1962, Pub. L. No. 87-834, § 20(a), 76 Stat. 960, 1059, and amended by other Acts of Congress since then. However, no mode of recovery or enforcement is specified for these penalties, unlike for myriad other penalties in the Code. We are loath to disturb this well-established s

Legal Framework and Application Section 2033 provides: “The value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.” Treasury Regulation § 20.2031-5 further specifies that the “amount of cash belonging to the decedent at the date of his death, whether in his possession or in the possession of another, or deposited with a bank, is included in the decedent’s gross estate.” To that end, the value of any check

20.2031-1(b), Estate Tax Regs. Fair market value is the “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Id. Under this standard, the hypothetical willing buyer’s knowledge extends beyon

20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973). 19Estate of Stevens v. Commissioner, T.C. Memo. 2000-53, 79 T.C.M. (CCH) 1519, 1521 (2000); Estate of Hinz v. Commissioner, T.C. Memo. 2000-6, 79 T.C.M. (CCH) 1289, 1296 (2000). 20Estate of Stevens v. Commissioner, 79

ving estate tax is not the predominant motive. Estate of Black v. Commissioner, 133 T.C. at 362-363. The bona fide sale exception further requires that the transfer be made in good faith. Estate of Bongard v. Commissioner, 124 T.C. at 118; see also sec. 20.2043-1(a), Estate Tax Regs. -74- [*74] In the context of transfers with respect to business entities, we and other courts have held that efficient, active management of the business and management succession may be legitimate, nontax purposes.

-29- [*29] 546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.); see sec.

cutor may be held personally liable under 31 U.S.C. sec. 3713, often referred to as the Federal Priority Statute (FPS), if the executor pays a debt of the estate before satisfying and paying a claim owed to the United States. 31 U.S.C. sec. 3713(b); sec. 20.2002-1, Estate Tax Regs. (defining a “debt” as including a beneficiary’s distributive share of an estate). The term “claim” for purposes of the FPS means “any amount of funds or property that has been determined by an appropriate official of

20.2036-1(c)(1), Estate Tax Regs. It's not even necessary that the decedent's right be legally enforceable--"The existence offormal legal structures which prevent dejure retention ofbenefits of the transferred property does not preclude an implicit retention ofsuch benefits." Estate ofBongard, 124 T.C. at 129 (quoting Estate ofThompson, 382 F.

20 (2020), to approve affordable housing projects until it reached a level of 10% affordable housing. The town was roughly 700 units short ofits 10% requirement, so it was not in a strong position to deny 40B projects. The town had been granted a one-year moratorium with respect to approving 40B projects because ofother projects that had recen

Section 20.2107-1, Estate Tax Regs., provides that ifa nonresident expatriate decedent owns or is considered to own a certain amount ofthe voting shares in a foreign corporation at the time ofhis death, his gross estate must include an amount based upon the FMV ofhis percentage ownership interest in the foreign corporation and the portion ofthe for

20.2036-1(c)(1), Estate Tax Regs. It's not even necessary that the decedent's right be legally enforceable--"The existence offormal legal structures which prevent dejure retention ofbenefits of the transferred property does not preclude an implicit retention ofsuch benefits." Estate ofBongard, 124 T.C. at 129 (quoting Estate ofThompson, 382 F.

You do not qualify for first time abatement criteria under Internal Revenue Manual Section 20.1.1.3.6.l(l)(a) as you had a previously assessed failure to pay penalty and failure to pay estimated tax penalty for tax period June 30, 2010[,] which was within the prior three years.

Barnhart, 367 F.3d 882, 887 (9th Cir. 2004); Nielson v. Sullivan, 992 F.2d 1118, 1121-1122 (10th Cir. 1993); Davis v. Shalala, 985 F.2d 528, 534-535 (11th Cir. 1993); see also Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise § 20.1 (6th ed. 2019). - 15 - Riggs v. Johnson Cty., 73 U.S. (6 Wall.) 166, 187 (1867) (citing Rhode Island v. Massachusetts, 37 U.S. (12 Pet.) 657, 718 (1838)); accord Peacock v. Thomas, 516 U.S. 349, 356 (1996). Recognizing this universal rule, whe

Section 20.2107-1, Estate Tax Regs., provides that ifa nonresident expatriate decedent owns or is considered to own a certain amount ofthe voting shares in a foreign corporation at the time ofhis death, his gross estate must include an amount based upon the FMV ofhis percentage ownership interest in the foreign corporation and the portion ofthe for

20-109(D) (2016) provides: "Unless otherwise provided by stipulation or contract, spousal support and maintenance shall terminate upon the death of either party or remarriage ofthe spouse receiving support." Thus, Va. Code Ann. sec. 20-109(D) clarifies the spousal support termination date. The Order meets the requirements ofsection 71(b)(1)(D)

e suitability ofthe property's current use under existing zoning and marketing conditions, together 5sSchnallinger v. Commissioner, T.C. Memo. 1987-9, 52 T.C.M. (CCH) 1311, 1314 (1987). "United States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec. 20.2031-1(b), Estate Tax Regs.); Marine v. Commissioner, 92 T.C. 958, 982 (1989), M, 921 F.2d 280 (9th Cir. 1991). 6°Stanley Works & Subs. v. Commissioner, 87 T.C. 389, 400 (1986); see Hilborn v. Commissioner, 85 T.C. 677, 689 (1985). - 70 - [*7

tions. Sec. 2051. The value ofa decedent's gross estate generally includes the fair market value ofthe property owned by the decedent on the date ofdeath or included in the decedent's gross estate under the Code. See secs. 2031(a), 2033, 2036, 2038; sec. 20.2031-1(b), Estate Tax Regs. In general, section 2036 includes property in a decedent's gross estate if: (1) the decedent made an inter vivos transfer ofproperty; (2) the decedent's transferwas not a bona fide sale for adequate and full consid

e suitability ofthe property's current use under existing zoning and marketing conditions, together 5sSchnallinger v. Commissioner, T.C. Memo. 1987-9, 52 T.C.M. (CCH) 1311, 1314 (1987). "United States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec. 20.2031-1(b), Estate Tax Regs.); Marine v. Commissioner, 92 T.C. 958, 982 (1989), M, 921 F.2d 280 (9th Cir. 1991). 6°Stanley Works & Subs. v. Commissioner, 87 T.C. 389, 400 (1986); see Hilborn v. Commissioner, 85 T.C. 677, 689 (1985). - 70 - [*7

- 36 - deadline extensions to pay over the equity in their assets--were not entitled to the installment agreement they had proposed.26 26The dissent contends that the SO concluded "without any analysis that failing to liquidate every asset is an automatic bar to getting a * * * [partial payment installment agreement]". Dissenti

20.2002-1, Estate Tax Regs. Once petitioner became delinquent in paying the estate tax, respondent both filed an NFTL with respect to the probate property under petitioner's control and notified him ofrespondent's intent to levy to collect the - 12 - [*12] unpaid tax. See secs. 6321, 6331(d)(1). Petitioner invoked his rights to a CDP hearing,

taxable estate consists ofthe value ofthe gross estate after applicable deductions. Sec. 2051. The value ofa decedent's gross estate includes the fair market value ofthe property owned by the decedent on the date ofdeath. - 13 - [*13] Sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value for this purpose is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable know

Section 2033 provides that "[t]he value ofthe gross estate shall include the value ofall property to the extent ofthe interest therein of the decedent at the time ofhis death." Section 20.2033-1(b), Estate Tax Regs., lists examples ofproperty includible in a decedent's gross estate and provides, in relevant part, that "[n]otes or other claims held by the decedent are likewise included".

20.2031-1(b), Estate Tax Regs. We determined that there was only a 25% chance that the partnership would sell its assets after Natale Giustina's limited-partner interest was transferred to a hypothetical third party. We reasoned that there was a 25% chance that the hypothetical buyer ofthe 41% limited-partner interest could convince two-thirds

20.2031-1(b), Estate Tax Regs. The willing buyer and the willing seller are hypothetical persons. Estate ofNewhouse v. Commissioner, 94 T.C. 193, 218 (1990) (citing Estate ofBright v. United States, 658 F.2d 999, 1006 (Former 5th Cir. 1981)). The hypothetical buyer and seller are presumed to be dedicated to achieving the maximum economic advan

Petitioners cite the definition of"fair value" as defined by the Financial Accounting Standards Board and "fair market value" as defined in section 20.2031-1(b), Estate Tax Regs.

Petitioners cite the definition of"fair value" as defined by the Financial Accounting Standards Board and "fair market value" as defined in section 20.2031-1(b), Estate Tax Regs.

20.2055-2(a) and (b), Estate Tax Regs. Concerned about perceived abuses, Congress added section 2055(e)(2)(A), TRA '69 sec. 201(d)(1), 83 Stat. at 560, to remove any "incentive to favor the income beneficiary over the remainder beneficiary by means ofmanipulating the trust's investments", H.R. Rept. No. 91-413 (Part 1), at 59 (1969), 1969-3 C.

20.2033-1(a), Estate Tax Regs. The value ofevery item ofproperty includible in a decedent's gross estate is generally its fair marketvalue at the time the decedent died. Ld. sec. 20.2031-1(b). The creation oflegal interests in property is generally governed by State law, while Federal law determines what interests so created shall be taxed. Es

curacy related penalty. The 2007 income tax has been paid. Onlythe penalty and interestremain due and owing. We considered yourrequest for the abatement ofinterest, but deter- mined that you do not qualify, in accordance with Internal Revenue Manual Section 20.2.7. We did not find any errors or delays on our part that merit the abatement ofinterest in our review ofavailable records and other information. You raised no other issues. Balancing ofneed for efficient collection with taxpayer concern

20.1-02-18.2 (1981)). The United States brought a declaratoryjudgment action in the U.S. District Court for the District ofNorth Dakota, seekingjudgment that, inter alia, the State law was hostile to Federal law in certain respects and could not be applied. E at 309. The District Court granted the United States summaryjudgment, and the United

20.2031-1(b), Estate Tax Regs. Valuation is ultimately a question offact. Estate ofNewhouse v. Commissioner, 94 T.C. 193, 217 (1990). Ifthe propertyto be valued is stock ofa closely held corporation, "actual arm's-length sales ofsuch stock in the normal course ofbusiness within a reasonable time before or after the valuation date are -21- [*2

20.2031-1(b), Estate Tax Regs. Fair market value is the price at which propertywould change hands between a willing buyer and a willing seller, neither under any compulsion to buy or sell and both having knowledge ofrelevant facts. Il The willing buyer and seller are hypothetical, and valuation does not take into account the personal character

20.1-02-18.2 (1981)). The United States brought a declaratoryjudgment action in the U.S. District Court for the District ofNorth Dakota, seekingjudgment that, inter alia, the State law was hostile to Federal law in certain respects and could not be applied. E at 309. The District Court granted the United States summaryjudgment, and the United

546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.).

20.2031-7(d)(1), Estate Tax Regs. (2003); sec. 1.7520- 3The appraisal and professional fees were calculated as $84,000, for a total reported charitable contribution by the partnership of$33,019,000. _ 9 _ 1(a)(1), Income Tax Regs. (2003).4 In his appraisal report, Mr. Gelbtuch states that he was "advised that the applicable Remainder Interest

20.2042-1(c), Estate Tax Regs. Cf. Estate ofThompson v. Commissioner, T.C. Memo. 1981-200, 1981 Tax Ct. Memo LEXIS 547, at *18-*21 (rejecting taxpayer's argument that beneficiary designation was intended to be irrevocable-- and thus not an "incident ofownership" under section 2042(2)--after finding that taxpayer couldn't establish that designa

he 20Compare the definitions offair market value set forth in Uniform Appraisal Standards for Federal Land Acquisitions sec. A-9 (2000) referencing "a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer", and sec. 20.2031-1(b), Estate Tax Regs., referencing "[a] willing buyer and a willing seller * * * both having reasonable knowledge ofrelevant facts." - 30 - [*30] burden ofproofto respondent pursuant to section 7491. In his response to the estate's motio

Section 20.16 ofthe amended declaration provides that the owner ofthe office property owns the "Facade" and "reserves the right, in its sole and exclusive discretion, to [] grant an easement in or dedicate the Facade to or for the benefit of any private, city, county, state or federal historic preservation agency or trust." Section 1.1 ofthe amended d

20.2042-1(c), Estate Tax Regs. Cf. Estate ofThompson v. Commissioner, T.C. Memo. 1981-200, 1981 Tax Ct. Memo LEXIS 547, at *18-*21 (rejecting taxpayer's argument that beneficiary designation was intended to be irrevocable-- and thus not an "incident ofownership" under section 2042(2)--after finding that taxpayer couldn't establish that designa

546, 551 (1973) (applying the standard set forth in section 20.2031-1(b), Estate Tax Regs.).

Thomson erred in (1) not classifying the subject interest as a nonfamily member's interest (assignee's interest), and (2) failing to value the subject interest as an assignee's interest under the willing buyer-willing seller standard prescribed in section 20.2031-1(b), Estate Tax Regs.

section 20.2055-2(b), Estate Tax Regs., and its history instruötive in construing 26 C.F.R. section 170A-1(e). See Briggs v. Commissioner, 72 T.C. 646, 657 (1979), aff'd without published opinion, 665 F.2d 1051 (9th Cir. 1981). The Supreme Court in Commissioner v. Estate ofSternberger, 348 U.S. 187, 194 (1955), discussed the estate tax regulations

Rodriguez testified that petitioners did not have an office in Florida. - 39 - [*39] 274(d). In addition, petitioners provided no documentationto support their claimed interest on office credit cards. Petitioners are not entitled to any interest expense deductions. 8. Lease ofOther Business Property Expense Petitioners claimed a deduct

ude the value ofall propertyto the extent ofthe interest therein ofthe decedent at the time ofhis death." As alternately expressed bý regulation, the gross estate encompasses all property "beneficially owned by the decedent at the time ofhis death." Sec. 20.2033-1(a), Estate Tax Regs. Sections 2034 through 2045 then explicitly mandate inclusion ofseveral more narrowly defined classes ofassets. Mrs. Lockett held a legal and beneficial interest in all the assets ofMariposa on the date ofher death.

her posttrial brief, unsupported by any evidence, claims with respect to 'the hours and rates of the estate's attorney. , . Amounts deductible 'as administration expenses are limited to those actually and necessarily 'incurred. Sec 2053(a) (2); see sec. 20.2053-3(a) and (b) (1), Estate Tax Regs We are not persuaded that the amounts claimed by jetitioner for executor's commissions or for attorney's fees are reason2.ble or that they have, to date, been actually and necessarily incurred. - Wé have

20.2031-1(b), Estate Tax Regs. The fair market value of property is not affected by whether an owner has actually put the property to its highest and best use. The reasonable and objective possibilities for the highest and best use of property control its value. See United States v. Meadow Brook Club, 259 F.2d 41, 45 (2d Cir. - 60 - 1958); St

nprobate property (second category expenses), which would include the fees at issue herein, to the same extentas they would be.deductible under section 2053(a); i.e., as ifincurred in administeringprobate property (first category expenses). See also sec. 20.2053-8, Estate Tax Regs. - . . In pertinentpart, section 2053(a) provides a deduction "for administration expenses * * * as are allowable by the laws ofthejurisdic ion * * * [in this case, Pennsylvania3] under which the estate is being admini

property would change hands between a willing buyer and a willing seller, neither being under a compulsion to buy or to sell and both having reasonable knowledge ofall the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973) (citing sec. 20.2031-1(b), Estate-Tax Regs.); Bank One Corp. v. Commissioner, 120 T.C. 174, 304-306 (2003), aff'd in part, vacated in.part and remanded sub nom. J.P. Mgrgan Chase &,Co. v. Commissioner, 458 F.3d 564 (7th Cir. 2006). The fair market value ofpr

20.2042 1(c).(2), Estate Tax Regs. The respondent determined that the values of the six polidies should be included in th value of the gross estate. Under Rule 142 (a) (1) , the taxpayer has the burden of proving that determinations in the notice of deficiency arerincorrect. Section '/491(a) provides that the burden of proof rests with the IRS

on the date of 4All Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect for the date of decedent's death, unless otherwise indicated. -14- death. Sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is the price that a willing buyer would pay a willing seller, both persons having reasonable knowledge of all relevant facts and neither person being under compulsion to buy or to sell. See sec. 20

s market value and not fair market value as a standard of value. In that regard, the definition of market value in the appraisal embodies selective elements of fair market value but does not encompass the definition of fair market value required by sec. 20.2031-1(b), Estate Tax Regs. See Bank One Corp. v. Commissioner, 120 T.C. 174, 303 (2003), affd. in part and vacated in part sub nom. J.P. Morgan Chase & Co. v. Commissioner, 458 F.3d 564 (7th Cir. 2006). "Respondent's request for production of

Actually and Reasonably Necessary The amount of deductible administration expenses is limited to those expenses which are actually and neces arily incurred in the administration of the estate. Estate of Todd v. Commissioner, 57 T.C. 288, 296 (1971); sec. 20.2053-3(a), Estate Tax Regs. Respondent argues that the loan was not actually and reasonably necessary because (1) the 2001 Trust could have instead sold illiquid assets (e.g., a portion of its interest in Club LLC) to the Walter Trust and (2)

. Fair market value is defined as "the price at which the - 11 - property would change hands between aiwilling buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Sec. 20.2031-1(b), Estate Tax Regs. The willing buyer is a hypothetical person; therefore, an actual buyer's personal characteristics are disregarded. Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990). If the property to-be valued is stock o

The notice did not determine a deficiency with respect to the estate's claims against Kavanagh and Northern Trust or disallow attorney's fees claimed to date as deductions with respect to administering the estate. On July 8, 2008, a timely petition was filed. In April 2008, coexecutors filed a motion to compel in the State court

ssioner, 26 T.C. 257, 261-262 1(1956);' Allen v. Commissioner, T.C. Memo. 1999-385. Section" 6018 (a) (1) directs the executor in 'cases where the decedent's gross estate exceeds the applicable exclusion amount to file an estate ta< return. See also sec. 20.6018-2, Estate Tax Regs. -Therefore, as statutory executor, Ms. Norberg had the responsibility and authority to file the -estate tax return. Section 6036 provides in part: "every executor (as defined in section 2203),- shäll give notice ,0f h

development rights in New York City. Petitioners premise their arguments regarding the sale of their development rights on the 1989 New York State law that authorizes cities to set up transferable development rights programs. See N.Y. Gen. City Law sec. 20-f (McKinney 2003). That law provides: 2. In addition to existing powers and authorities to regulate by planning or zoning including authorization to provide for transfer of development rights pursuant to other enabling law, the legislative bo

20.2036-1(a), Estate Tax Regs.; see also Estate of Bongard v. Commissioner, 1 4 T.C. 95, 112 (2005) . If a decedent gratui ously transferred a gmainder interest in property and retained, a life estate, the decedent transferred the property while etaining possession or enjoyment for life arid thus sectio 2036 (a) (1). would apply. The general p

20.2039-1(b) (1) (ii) , Income Tax Regs. (emphasis added) (concerning the inclusion of an annuity or other payment stream in the gross estate of a decedent) . 1026 C. F. R. sec . 1. 823-6 (c) (2) (ii) , Income Tax Regs . (emphasis added) (concerning statutory underwriting income or loss for mutual insurance companies) . - 24 - to refer to a n

the re ulations prescribed by the Commissioner, if "the district direct r finds that paymentgon the- due date * * * would impose I , 7 -- undue hardship upon the estatg, " he may extend the payment due date as detailed in the applicable regulatiops Sec. 20.6161- 1 (a) (2) (i) , Estate Tax Regs . " [U] ndue hardship" involves more than mere inconvenience . A taxpayer, claimin undue hardship must shöw that the estate would sustain a very su stantial and severe financial loss ifaforced to pay. a ta

546 ;-55l (1973) (applying the standard .set forth in section 20 .2031-1 (b)-, Estate Tax_Regs .) .

20.2031-2(b), Estate Tax Regs.; sec. 25.2512-2(b), Gift Tax Regs. - 30 - percent. Moreover, petitioner argues that, in those 2 years, vacant land in Gunnison County appreciated by 87 percent. Respondent objects that Gunnison County comprises many different economic areas, including the towns of Gunnison and Crested Butte and the area surround

and the MFLP and CRFLP trustees that decedent would retain the right to use that transferred stock .11 Section 20 .2036-1(b)(2), Estate Tax Regs ., states that a decedent retains "[t]he `use, possession, right to the income, or other enjoyment of the transferred property' * * * to the extent that the use, possession, right to the income, or other enjoyment is to be applied toward the discharge of a legal obligation of the decedent, or otherwise for

and the MFLP and CRFLP trustees that decedent would retain the right to use that transferred stock .11 Section 20 .2036-1(b)(2), Estate Tax Regs ., states that a decedent retains "[t]he `use, possession, right to the income, or other enjoyment of the transferred property' * * * to the extent that the use, possession, right to the income, or other enjoyment is to be applied toward the discharge of a legal obligation of the decedent, or otherwise for

and the MFLP and CRFLP trustees that decedent would retain the right to use that transferred stock .11 Section 20 .2036-1(b)(2), Estate Tax Regs ., states that a decedent retains "[t]he `use, possession, right to the income, or other enjoyment of the transferred property' * * * to the extent that the use, possession, right to the income, or other enjoyment is to be applied toward the discharge of a legal obligation of the decedent, or otherwise for

20.6018-2, Estate Tax Regs. Although they may not have had complete information about the German assets, they could have satisfied that obligation by filing a timely tax return based on the best information (continued...) - 13 - C. Conclusion Petitioner has failed to show that, on account of reasonable cause and not due to willful neglect, pe

Payments shall be made on the first (1st) day of each month beginning July 1, 2004, and continuing on the first (1st) day of each month thereafter in accordance with Section 20-109, 1950 Code of Virginia, as amended, until the death of either party, or until the remarriage of Complainant or until the Complainant cohabits with an unrelated male in a relationship analogous to a marriage for a period of more than one (1) year; AND, IT IS FURTHER ORDERED * 5 .

He begins with section 20 At the hearing on the motion, the Commissioner’s counsel took an extreme view of the application of Rhone-Poulenc: The Court: The Kligfelds, they take the life- enhancing serum, they don’t get rid of their distributed partnership property until 2100.

ommissioner, 114 F.3d 366, 369 (2d Cir. 1997), affg. T.C. Memo. 1995-547. However, an important factor bearing upon reasonable cause is the expeditiousness with which a taxpayer rectifies a mistake, once discovered. See Internal Revenue Manual (IRM) sec. 20.1.1.3.1.2 (2) (Aug. 20, 1998) (assessment of ordinary business care and prudence requires consideration of length of time between the event cited as a reason for noncompliance and subsequent compliance); IRM sec. 20.1.1.3.1.2.3 - 8 - (2) (Aug

Section 20a) allows taxpayers a credit against tax imposed for each qualifying child . Section 24 (c)(1)(A) provides that a "qualifying chi d" for purposes of section 24 is "any individual if * * * the to payer is allowed a deduction under section 15 1 with respect to such individual for the taxable year" . Because petitioner is n entitled to a dep

20.2032-1(c)(1), Estate Tax Regs. Accordingly, the Kohler stock is not treated as disposed of on the date of the reorganization and is not valued as of May 11, 1998, the date of the reorganization, but on the alternate valuation date instead. See sec. 2032(a)(2); sec. 20.2032- 1(c)(1), Estate Tax Regs. 2. Respondent’s Argument That We Should V

20.2032-1(c)(1), Estate Tax Regs. Accordingly, the Kohler stock is not treated as disposed of on the date of the reorganization and is not valued as of May 11, 1998, the date of the reorganization, but on the alternate valuation date instead. See sec. 2032(a)(2); sec. 20.2032- 1(c)(1), Estate Tax Regs. 2. Respondent’s Argument That We Should V

ding price discounted by 9 percent. 5 Gregory Range (Range) discounted the estate’s Reliance shares by 20 percent from the $20.625 valuation date closing trading price instead of from the $20.8125 valuation date average trading price as required in sec. 20.2031-2(b)(1), Estate Tax Regs. In a letter to the estate’s attorney attached to his valuation report, Range states: “If the IRS wants to express the fair market value in terms of the discount from the mean of the high and the low prices as of

20.2032-1(c)(1), Estate Tax Regs. Accordingly, the Kohler stock is not treated as disposed of on the date of the reorganization and is not valued as of May 11, 1998, the date of the reorganization, but on the alternate valuation date instead. See sec. 2032(a)(2); sec. 20.2032- 1(c)(1), Estate Tax Regs. 2. Respondent’s Argument That We Should V

ax "on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States." A deceased taxpayer's gross estate includes the fair market value of any interest the decedent held in Property. See secs. 2031(a), 2033; sec. 20.2031-1.(b), Estate Tax Regs.; United States v. Cartwright, 411 U.S. 546, 551 (1973). Fair market value reflects the price that the property would "change hands between a willing buyer and a willing .seller, neither being under any compulsion

ent may be amended by the Manager at any time in its sole discretion, provided that (a) any amendment to Section 9(d), Section 11, the first sentence of Section 13, Section 14, the proviso to the first sentence of Section 15, Section 17, Section 18, Section 20, Section 24, this Section 29 or Section 34 hereof shall not be effective without the Initial Member’s prior written consent, which consent shall not be unreasonably withheld and (b) any amendment which materially and adversely affects the

ve stipulated that the date of death value is $2,400,000. - 7 - Section 2033 provides: “The value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.” See also sec. 20.2033-1(a), Estate Tax Regs. (“The gross estate of a decedent * * * includes under section 2033 the value of all property, whether real or personal, * * * beneficially owned by the decedent at the time of his death.”). As a general rule, the Com

s of Profl. Conduct, R. 1.4(a), cmt. 5 (2004) (“For example, when there is time to explain a proposal made in a negotiation, the lawyer should review all important provisions with the client before proceeding to an agreement”); 1 Restatement, supra, sec. 20 (a lawyer must keep a client reasonably informed about the matter and must consult with a client to a reasonable extent concerning decisions to be made by the lawyer). On the documents before us, Messrs. O’Donnell’s and Jones’s awareness of t

s of Profl. Conduct, R. 1.4(a), cmt. 5 (2004) (“For example, when there is time to explain a proposal made in a negotiation, the lawyer should review all important provisions with the client before proceeding to an agreement”); 1 Restatement, supra, sec. 20 (a lawyer must keep a client reasonably informed about the matter and must consult with a client to a reasonable extent concerning decisions to be made by the lawyer). On the documents before us, Messrs. O’Donnell’s and Jones’s awareness of t

ayer's records have been lost or destroyed through circumstances beyond his control, he is entitled to substantiate the deductions by reconstructing his expenditures through other credible evidence"); 6 Administration, Internal Revenue Manual (CCH), sec. 20.1.1.3.1.2.5, at 45,014 (Aug. 20, 1998).4 The most 4The Internal Revenue Manual contains the following instructions for evaluating a taxpayer's inability to obtain records as it bears on the taxpayer's claim that he had reasonable cause for an

er of fact must weigh all relevant evidence and draw appropriate inferences to arrive at the property’s fair market value. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (1944); Helvering v. Natl. Grocery Co., 304 U.S. 282, 294 (1938); sec. 20.2031-1(b), Estate Tax Regs. For this purpose, fair market value is the price that a hypothetical willing buyer would pay a hypothetical willing seller, both persons having reasonable knowledge of all relevant facts and neither person under a

20.2031- 1(b), Estate Tax Regs. The willing buyer and willing seller are hypothetical persons. Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990) (citing Estate of Bright v. United States, 658 F.2d 999, 1006 (5th Cir. 1981)). The hypothetical buyer and seller are presumed to be dedicated to achieving the maximum economic advantage. Id

ent may be amended by the Manager at any time in its sole discretion, provided that (a) any amendment to Section 9(d), Section 11, the first sentence of Section 13, Section 14, the proviso to the first sentence of Section 15, Section 17, Section 18, Section 20, Section 24, this Section 29 or Section 34 hereof shall not be effective without the Initial Member’s prior written consent, which consent shall not be unreasonably withheld and (b) any amendment which materially and adversely affects the

Respondent contends that petitioner’s expert did not use the standard for fair market value set forth in section 1.170A-1(c)(2), Income Tax Regs., and section 20.2031- 1(b), Estate Tax Regs., to wit: The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having - 39 - reasonable knowledge of relevant facts.18 That standard assumes a hypothetical buyer and seller so as to employ an objective stand

Respondent contends that petitioner’s expert did not use the standard for fair market value set forth in section 1.170A-1(c)(2), Income Tax Regs., and section 20.2031- 1(b), Estate Tax Regs., to wit: The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having - 39 - reasonable knowledge of relevant facts.18 That standard assumes a hypothetical buyer and seller so as to employ an objective stand

which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. The parties dispute the value of the Victorville property, which is includable in decedent's gross estate. At trial, the estate called B.G. Thompson as an expert valuation witness. Mr. Thompson prepared an expert w

y to $16,326,408 and the accuracy-related penalty to $6,530,563. - 20 - willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031- 1(b), Estate Tax Regs. With regard particularly to unlisted, closely held stock in corporations such as TPC (with regard to which no bid and asked prices or other arm's-length sales information is available), the statutory language of se

parties at the time of the transfer, even if the retained interest is not legally enforceable.25 Estate of Harper v. Commissioner, supra (citing Estate of Maxwell v. Commissioner, 3 F.3d 591, 593 (2d Cir. 1993), affg. 98 T.C. 594 (1992)); see also sec. 20.2036-1(a), Estate Tax Regs. (“An interest or right is treated as having been retained or reserved if at the time of the transfer there was an understanding, express or implied, that the interest or right would later be conferred.”). “The reten

20.2055-1(a), Estate Tax Regs. (emphasis added). Courts likewise have declined to permit deductions where the amounts passing to charity turned upon the actions either of the decedent’s personal - 28 - representatives, see Estate of Marine v. Commissioner, 97 T.C. 368, 378-379 (1991), affd. 990 F.2d 136 (4th Cir. 1993), or of beneficiaries of

is especially true when there is nothing in the record indicating that the tax-assessed value was intended to represent fair market value. Kellahan v. Commissioner, T.C. Memo. 1999-210; Estate of Dowlin v. Commissioner, T.C. Memo. 1994-183; see also sec. 20.2031-1(b), Estate Tax Regs. 35In 2554-58 Creston Corp. v. Commissioner, 40 T.C. 932, 940 n.5 (1963), we stated: “Although valuations for real estate taxes may often be too low to be relied upon as furnishing the correct value of a particular

20.2106- 1(a)(2)(i), Estate Tax Regs.; see sec. 2106(a)(2)(A)(ii). This deduction may not exceed the value of the transferred property required to be included in the gross estate. Sec. 2106(a)(2)(D). Decedent did not make a bequest to a corporation or association created or organized in the United States; decedent made all relevant bequests to

at most, $800,000. At trial, both sides to this controversy offered witnesses supporting their respective positions. Property includable in a decedent’s gross estate is generally included at its fair market value on the date of death. Sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is a factual determination, and the trier of fact must weigh all relevant evidence of value and draw appropriate references. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (1944); He

20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. Petitioner argues that FNBC’s valuations of its swaps met the fair market value requirement of section 475 in that they were the fair value of the swaps for purposes of financial accounting. According to petitioner, FNBC’s application to its swaps of the standards governing fair va

20 F 2d 711 (7th Cir. 1953) ; Amend v. 584-585 (1952) affd. 178 .85 (1949); secs. 1.446-1(c) (1) (i), Commissioner, . . In the present case, petitioners 1.451-1(a), Income Tax Regs. eceived a settlement payment in are cash basis taxpayers w o ehtioners' taxable year 1999. 1999. Thus, the issue concerns p - 9 - collection of a prebankruptcy Fe

20.2031-1(b) Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The determination of the fair market value of property is a factual determination, and the trier of fact must weigh all relevant evidence of value and draw appropriate inferences. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (1944); Helvering v. Natl. Grocery Co., 30

which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. at 551 (quoting sec. 20.2031-1(b), Estate Tax Regs.). In general, the best evidence of fair market value is “actual sales made in reasonable amounts and at arm’s length within a reasonable time before or after the date for which a value is sought.” Morris v. Commissi

section 20-107.3 (Michie 1986), provides in pertinent part as follows: Sec. 20-107.3. Court may decree as to property of the parties.--A. Upon decreeing the dissolution of a marriage * * * the court * * * shall determine the legal title as between the parties, and the ownership * * * of all property * * * of the parties * * *. * * * * * ** 2. Marit

991). Direct testimony a postmark was affixed may be sufficient to prove mailing. Estate of Wood v. Commissioner, supra. Standard operating procedures require stamping the “received” date on the face of Form 2688. See Internal Revenue - 33 - Manual sec. 20.1.2.1.2.3 (RIA 2002). Petitioners have provided indirect evidence the Form 2688 was mailed and received by respondent. First, both petitioners and respondent agreed petitioners would testify Form 2688 was timely mailed. Second, the Form 2688 s

Section 20.2031-1(b), Estate Tax Regs., defines fair market value as: “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.” The willing buyer and willing seller are hypothetical persons, rather than

031. The fair market value of property is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Sec. 20.2031- 1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The estate bears the burden of proof.2 Rule 142(a)(1). Both parties rely on the testimony of experts to establish the fair market value of decedent’s WSA stock. We may accept or rej

willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); Snyder v. Commissioner, 93 T.C. 529, 539 (1989); sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The standard is objective; it uses a hypothetical willing buyer and willing seller. See Propstra v. United States, 680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate of Newhouse v. Com

means “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.” Sec. 1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax Regs.; see Gay v. Commissioner, T.C. Memo. 1980-19; Black v. Commissioner, T.C. Memo. 1977-337. The fair market value of the - 11 - property immediately before the casualty and the fair market value of the property immed

20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. On brief, the - 5 - estate further contends that a “hypothetical, willing buyer may only become an assignee under this Partnership Agreement and Texas law”, and Mrs. Dailey “actually transferred” assignee interests, but there is “no evidence in the record before this Court regardi

The fair market value of a property interest is determined under the “willing buyer-willing seller standard” set forth in section 20.2031-1(b), Estate Tax Regs., as follows: The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

le the return or pay the tax.4 The parties 4 The time for filing the estate tax return may be extended but normally for not more than 6 months, so the return will be due not more than 15 months following the date of a decedent's death. Sec. 6081(a); sec. 20.6081-1(a), Estate Tax Regs. Moreover, the time for payment of the amount of estate tax shown, or required to be shown, can be extended for up to 12 months or, in cases of reasonable cause, up to 10 years. Sec. 6161(a)(1) and (2). The Court no

Section 20.2031-1(b), Estate Tax Regs., and section 25.2512-1, Gift Tax Regs., provide that the fair market value of an item of property is to be determined in the market in which such item is “most commonly sold to the public.” In the normal situation, a sale “to the public” refers to a sale to the “retail customer who is the ultimate consumer of

E.g., United States v. Cartwright, 411 U.S. 546, 551 (1973); Narver v. Commissioner, 75 T.C. 53, 96 (1980), affd. per curiam 670 F.2d 855 (9th Cir. 1982); McShain v. Commissioner, 71 T.C. 998, 1004 (1979); see sec. 1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512- 1, Gift Tax Regs. This is a question of fact to be determined from an examination of the entire record. See, e.g., Lio v. Commissioner, 85 T.C. 56, 66 (1985), affd. sub nom. Orth v. Commissioner, 813

20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. On brief, the - 5 - estate further contends that a “hypothetical, willing buyer may only become an assignee under this Partnership Agreement and Texas law”, and Mrs. Dailey “actually transferred” assignee interests, but there is “no evidence in the record before this Court regardi

20.2031-1(b), Estate Tax Regs. The fair market value of property is defined as "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts". IjL Intrafamily agreements must be subjected to greater sc

The fair market value of a property interest is determined under the “willing buyer-willing seller standard” set forth in section 20.2031-1(b), Estate Tax Regs., as follows: The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

E.g., United States v. Cartwright, 411 U.S. 546, 551 (1973); Narver v. Commissioner, 75 T.C. 53, 96 (1980), affd. per curiam 670 F.2d 855 (9th Cir. 1982); McShain v. Commissioner, 71 T.C. 998, 1004 (1979); see sec. 1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512- 1, Gift Tax Regs. This is a question of fact to be determined from an examination of the entire record. See, e.g., Lio v. Commissioner, 85 T.C. 56, 66 (1985), affd. sub nom. Orth v. Commissioner, 813

20.2031-1(b), Estate Tax Regs.] - 17 - The timing issue involved in placing a value on the gross estate was addressed by the Court of Appeals for the Fifth Circuit in the following oft-quoted pronouncement: Brief as is the instant of death, the court must pinpoint its valuation at this instant--the moment of truth, when the ownership of the d

which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. The parties dispute: (1) Whether the guaranty obligation of Mr. Hoffman is includable in decedent’s gross estate, and (2) the value of certain property interests includable in decedent’s gross estate. A. Guaranty P

20.2031-1(b), Estate Tax Regs. Fair market value is defined for these purposes as "the net amount which a willing purchaser * * * would pay for the interest to a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Sec. 20.2031-3, Estate Tax Regs. Fair market value is det

Under Table B in § 20.2031-7(d)(6) for the interest rate of 9.8 percent, the factor for the present value of a remainder interest due after a term of 5 years is .626597.

purposes as the price that a willing buyer would pay a willing seller, both having reasonable knowledge of all the relevant facts and neither being under compulsion to buy or to sell. See United States v. Cartwright, 411 U.S. 546, 551 (1973) (citing sec. 20.2031-1(b), Estate Tax Regs.); see also Snyder v. Commissioner, 93 T.C. 529, 539 (1989). The willing buyer and the willing seller are hypothetical persons, rather than specific individuals or entities, and the individual characteristics of the

e fair market value of property is “the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” See sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. We apply the willing buyer, willing seller test to value the - 14 - interests in the partnership that petitioners transferred under Texas law. We do not disregard the partnership beca

he property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.’” United States v. Cartwright, 411 U.S. 546, 551 (1973)(quoting sec. 20.2031-1(b), Estate Tax Regs.). The best method to value a corporation’s stock is to rely on actual arm’s-length sales of the stock within a reasonable period of the valuation date. See Estate of Andrews v. Commissioner, 79 T.C. 938, 940 (1982)

e property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.’” United States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec. 20.2031-1(b), Estate Tax Regs.). The best method to value a - 7 - corporation’s stock is to rely on actual arm’s-length sales of the stock within a reasonable period of the valuation date. See Estate of Andrews v. Commissioner, 79 T.C. 938, 940

20.2031- 1(b), Estate Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973); Estate of Simplot v. Commissioner, 112 T.C. 130, 151 (1999). The standard is objective, using a purely hypothetical willing buyer and seller who are presumed to be dedicated to achieving maximum economic advantage in any transaction involving the p

her the entitlements were to be obtained later. 3(...continued) 312, 337-338 (1989). - 14 - Property includable in a decedent’s gross estate is to be returned at its fair market value generally as of the date of decedent’s death. See sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of rele

20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. Respondent contends that the fair market value of the apartment building was $139,900 on August 10, 1993. Petitioners contend that the fair market value was $106,000. B. Expert Witnesses Both parties relied on expert witnesses. We may accept or reject expert testimony according to

20.2031-1(b), Estate Tax Regs.; United States v. - 8 - Cartwright, 411 U.S. 546, 551 (1973); Estate of Andrews v. Commissioner, 79 T.C. 938, 940 (1982). This is an objective test based upon hypothetical buyers and sellers in the marketplace and is not based upon a particular buyer or seller. See Estate of Bright v. United States, 658 F.2d 999

Section 20.1 of the partnership agreement provides that: The Partnership shall be dissolved upon the earlier of: (a) January 1, 2034. (b) The retirement, withdrawal, death or insanity of any General Partner or any other event or condition, other than removal, which, pursuant to the Act and unless otherwise provided in this Agreement, results in a G

the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031- 1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs.2 If 2 Petitioner bears the burden of proving that respondent’s determination in the notice of deficiency is erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Wells Fargo property was $987,950 on the valuation date. OPINION For Federal estate tax purposes, property includable in the gross estate is generally included at its fair market value on the date of decedent's death. See secs. 2031(a) and 2032(a); sec. 20.2031-1(b), Estate Tax Regs.1 Fair market value is defined as the price that a willing buyer would pay a willing seller, both persons having reasonable knowledge of all relevant facts and neither person being under a compulsion to buy or to sel

neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." United States v. Cartwright, 411 U.S. 546, 550 (1973); Collins v. Commissioner, 3 F.3d 625, 633 (2d Cir. 1993), affg. T.C. Memo. 1992-478; sec. 20.2031-1(b), Estate Tax Regs. The standard is objective, using a purely hypothetical willing buyer and willing seller, each of whom would seek to maximize his or her profit from any transaction involving the property. See Estate of Watts v. Com

20.6075-1, Estate Tax Regs. No extension request was filed, presumably because it was clear that Mrs. Chamberlain's estate would not be taxable because of the availability of the marital deduction and the unified credit. - 15 - an amount less than zero; accordingly, decedent reported zero estate tax liability on Line 27 of the Form 706 becaus

spondent determined an increase in the value of decedent's gross estate of $3,836,050. OPINION For Federal estate tax purposes, property is generally included in a gross estate at its fair market value on the date - 6 - of death. See sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is defined as the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of r

r v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989); see also Gillespie v. United States, 23 F.3d 36 (2d Cir. 1994); Collins v. Commissioner, 3 F.3d 625, 633 (2d Cir. 1993), affg. T.C. Memo. 1992-478; sec. 20.2031-1(b), Estate Tax Regs. The views of both hypothetical persons must be taken into account, and the characteristics of each hypothetical person may differ from the personal characteristics of the actual seller or a particular buyer. See Est

20(11) (1906)) was recodified into 49 U.S.C. secs. 11707, 10730, and 10103, these sections were commonly termed the Carmack Amendment. See Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1412 n.6 (7th Cir. 1987). Effective (continued...) - 71 - establish rates for the transportation of property under which the liability of the carrier was li

20.2031-1(b), Estate Tax Regs. Section 20.2031- 1(b), Estate Tax Regs., defines the term "fair market value" as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. * * * All relevant facts an

the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.’” United States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec. 20.2031-1(b), Estate Tax Regs.). Expert opinion sometimes aids the Court in determining valuation; other times, it does not. See Laureys v. Commissioner, 92 T.C. 101, 129 (1989). We evaluate such opinions in light of the demonstrated qualificati

ax purposes as the price that a willing buyer would pay a willing seller, both having reasonable knowledge of all the relevant facts and neither being under compulsion to buy or to sell. United States v. Cartwright, 411 U.S. 546, 551 (1973) (citing sec. 20.2031-1(b), Estate Tax Regs.); see also Snyder v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). The willing buyer and the willing seller are hypothetical persons, rather than specific individual

tional interest discount on the - 13 - fractional interest properties based on partition costs. For Federal estate tax purposes, property is generally included in the decedent’s gross estate at its fair market value at his death. See sec. 2031(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is defined as the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of r

purposes as the price that a willing buyer would pay a willing seller, both having reasonable knowledge of all the relevant facts and neither being under compulsion to buy or to sell. See United States v. Cartwright, 411 U.S. 546, 551 (1973) (citing sec. 20.2031-1(b), Estate Tax Regs.); see also Snyder v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). The willing buyer and the willing seller are hypothetical persons, rather than specific individua

Valuation of Closely Held, Unlisted Stock Property is included in a decedent's gross estate at its fair market value as of the date of the decedent's death or, if the executor elects, as of the alternate valuation date. See secs. 2031(a), 2032(a); sec. 20.2031-1(b), Estate Tax Regs. Under section 2032(a)(2), the alternate valuation date is the date 6 months after the decedent's death. Fair market value is the price at which property would change hands between a willing buyer and a willing selle

property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy - 5 - or sell and both having reasonable knowledge of the relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. The issue here is whether the property interests held in the survivor's trust should be aggregated with the property interests held by the QTIP marital trust for the purpose of determining the fair market value of t

property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.’” United States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec. 20.2031-1(b), Estate Tax Regs.). Expert opinion sometimes aids the Court in determining valuation; other times, it does not. See Laureys v. Commissioner, 92 T.C. 101, 129 (1989). We evaluate such opinions in light of the demonstrated qualificatio

n estate for which an executor may be held liable under the insolvency statute, including “a distribution of funds [from the estate] that is not, strictly speaking, the payment of a debt.” Want v. Commissioner, 280 F.2d 777, 783 (2d Cir. 1960); see sec. 20.2002-1, Estate Tax Regs.; see also United States v. Coppola, 85 F.3d 1015 (2d Cir. 1996). Federal estate and income tax liabilities constitute a debt due to the United States. See, e.g., United States v. Moore, 423 U.S. 77 (1975). - 27 - and a

Section 20.2053-1(b)(3), Estate Tax Regs.,1 forbids the deduction SEC. 20.2053-1(b)(3), Estate Tax Regs., provides as (continued...) - 15 - on the estate tax return of an item unless the amount of the liability "is ascertainable with reasonable certainty, and will be paid." The provision closes with the reassurance that, if the matter is not resol

546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.).

Section 20.2031-5, Estate Tax Regs., provides that "The amount of cash belonging to the decedent at the date of his death, whether in his possession or in the possession of another, or deposited with a bank, is included in the decedent's gross estate." If the checks in question constitute completed gifts during decedent's lifetime, the funds repres

ined value also reflects an increase (continued...) - 8 - Discussion For Federal estate tax purposes, property includable in the gross estate is generally included at its fair market value on the date of decedent's death. Secs. 2031(a) and 2032(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is defined as the price that a willing buyer would pay a willing seller, both persons having reasonable knowledge of all relevant facts and neither person being under a compulsion to buy or to sell

Tax Code Ann. secs. 1.04(7), 23.01 (West 1992). - 39 - are more persuaded by Dr. Friedman's adjustment for the better location of the comparables, and we shall apply negative adjustments of 40 percent to BL1, BL2, BL4, and BL5 and a negative adjustment of 10 percent to BL3 for location in order to determine the value of the Bates Cen

546, 551 (1973) (quoting section 20.2031-1(b), Estate Tax Regs.).

which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate Tax Regs. This determination presents a question of fact, Estate of Andrews v. Commissioner, 79 T.C. 938, 940 (1982), based on all the evidence in the record, Helvering v. Safe Deposit & Trust Co., 316 - 50 - U.S. 56, 66-67

Tax Code Ann. secs. 1.04(7), 23.01 (West 1992). - 39 - are more persuaded by Dr. Friedman's adjustment for the better location of the comparables, and we shall apply negative adjustments of 40 percent to BL1, BL2, BL4, and BL5 and a negative adjustment of 10 percent to BL3 for location in order to determine the value of the Bates Cen

20.0-1(b)(1), Estate Tax Regs. A nonresident is an individual who, at the time of his death, had his domicile outside the United States. Sec. 20.0-1(b)(2), Estate Tax Regs. The term "residence" or "domicile" as contemplated by the Federal estate tax statutes has never been construed or defined by an all-inclusive or all-exclusive definition. "

nowledge of all relevant facts and neither person compelled to buy or to sell. United States v. Cartwright, 411 U.S. 546, 551 (1973); Snyder v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989); see also sec. 20.2031-1(b), Estate Tax Regs. The willing buyer and the willing seller are hypothetical persons, instead of specific individuals or entities, and the characteristics of these hypothetical persons are not always the same as the personal character

erm rate in effect under section 1274(d)(1) for the month in which the valuation date falls and (2) a mortality component, reflecting the most recent mortality data from the U.S. census (updated every 10 years). Sec. 7520(a)(1) and (2), (c)(1), (3); sec. 20.7520-1(c), (b)(1)(i), (2), Estate Tax Regs.; sec. 25.7520-1(c), (b)(1)(i), (2), Gift Tax Regs. - 18 - Section 75204 (which was enacted on November 10, 1988, as part of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-6

ax purposes as the price that a willing buyer would pay a willing seller, both having reasonable knowledge of all the relevant facts and neither being under compulsion to buy or to sell. United States v. Cartwright, 411 U.S. 546, 551 (1973) (citing sec. 20.2031-1(b), Estate Tax Regs.); see also Snyder v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). The willing buyer and the willing seller are hypothetical persons, rather than specific - 20 - ind

Conclusion We will not enter decision until an extension of time for the payment of petitioner's estate tax under section 6161 is no longer in effect and any administrative appeal of respondent's denial of petitioner's request for an extension is final, see section 20.6161-1(b), Estate Tax Regs., or until petitioner fully pays its outstanding Federal tax liability and related interest, whichever occurs first.

istencies, and the unbusinesslike structure of the so- called minimum advance royalty, all demonstrate that any possibility of profits was so remote as to be negligible. Compare United States v. Dean, 224 F.2d 26, 29 (1st Cir. 1955) (for purposes of sec. 20.2055-2(b)(1), Estate Tax Regs., “so remote as to be negligible” defined as the “chance which persons generally would disregard as so highly improbable that it might - 39 - be ignored with reasonable safety in undertaking a serious business tr

20.6075-1, Estate Tax Regs. Section 6081(a) permits the Secretary to grant a reasonable extension of time for the filing of a return but provides that, "Except in the case of taxpayers who are abroad, no such extension shall be for more than 6 months." The regulations issued with respect to section 6081(a) provide that the total allowable exte

Specifically, Section 16 lost $2,600; Section 18 lost $3,500; Section 20 lost $65,973.87; Section 21 lost $22,000 and Section 23 lost $37,816.60.

20.2040-1(b), Estate Tax Regs., pass outside the subchapter J estate because the funds are not subject to estate administration. Petersen v. Commissioner, supra. Proceeds of life insurance policies, sec. 101(a); sec. 1.101-1(a), Income Tax Regs., Totten trusts, or savings bank account trusts, property held in revocable trusts that terminate at

having - 6 - reasonable knowledge of relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); Collins v. Commissioner, 3 F.3d 625, 633 (2d Cir. 1993), affg. T.C. Memo. 1992-478; Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989); sec. 20.2031-1(b), Estate Tax Regs. The question of fair market value involves a question of fact, and the trier of fact must weigh all relevant evidence and draw appropriate inferences. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (19

20.2031-1(b), Estate Tax Regs.; United States v. Cartwright, 411 U.S. 546, 551 (1973); Krapf v. United States, 977 F.2d 1454, 1457 (Fed. Cir. 1992); Estate of Kaplin v. Commissioner, 748 F.2d 1109, 1111 (6th Cir. 1984), revg. T.C. Memo. 1982-440; Estate of Brown v. Commissioner, 425 F.2d 1406, 1406-1407 (5th Cir. 1970), affg. T.C. Memo. 1969-9

20.2041-1(c)(1), Estate Tax Regs. When Oak Den was transferred to the trust pursuant to the terms of Mr. Ogden's will, it obtained a basis of $259,000. Apart from Mrs. Ogden's noncumulative power to withdraw 5 percent of the trust's corpus, which resulted in the inclusion of 13Secs. 2041(b)(1)(A), (B), and (C) set forth three exceptions to thi

illing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." United States v. Cartwright, 411 U.S. 546, 551 (1973); Estate of Newhouse v. Commissioner, supra at 217; sec. 20.2031-1(b), Estate Tax Regs. Because valuation is necessarily an approximation, the figure at which the Court arrives need not be one as to which there is - 9 - specific testimony, if it is within the range of figures that may properly be dedu

1953); Allen v. Commissioner, 66 T.C. 340, 346 (1976). The parties have stipulated: (1) The relocation was accomplished in order to permit the use of the pipeline in the 3 See also 1 Bittker and Lokken, Federal Taxation of Income, Estates and Gifts, sec. 20.4.8, at 20-92 (2d ed. 1989). 4 As the Supreme Court has observed, the cases in this area "appear difficult to harmonize". See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 86 (1992). - 12 - ordinary and normal course of petitioner's business; (

included in a decedent's gross estate is "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Sec. 20.2031-1(b), Estate Tax Regs. This requires property to be valued from the viewpoint of a hypothetical buyer and seller, each of whom would seek to maximize his or her profit from any transaction involving the property. See Estate of Watts v. C

441, 451 (1980). 9 All Rule references are to the Tax Court Rules of Practice and Procedure. All section references are to the Internal Revenue Code in effect at the date of decedent's death. - 16 - having reasonable knowledge of relevant facts." Sec. 20.2031- 1(b), Estate Tax Regs. In the case of unlisted stock, the price at which sales of stock are made in arm's-length transactions in an open market is the best evidence of its value. Champion v. Commissioner, 303 F.2d 887, 893 (5th Cir. 1962)

546, 551 (1973) (quoting section 20.3031-1(b), Estate Tax Regs.); Collins v.

rmer v. United States, 238 F. Supp. 29, 34, 36 (D. Hawaii 1964). - 21 - The fair market value of property on either the date of a decedent's death or on the alternate valuation date is included in a decedent's gross estate. Secs. 2031(a), 2032(a); sec. 20.2031-1(b), Estate Tax Regs. Petitioner did not elect to value the estate on the alternate valuation date. Thus, we must decide the fair market value of decedent's Beth W. Corp. stock on the date of death. The fair market value of stock, includi

Circuit in Estate of Street v. Commissioner, 974 F.2d 723, 728 (6th Cir. 1992), affg. in part, revg. in part, and remanding T.C. Memo. 1988-553, that the question of chargeability of administration expenses is one of Federal not State law, and that sec. 20.2056(b)-4(a), Estate Tax Regs., controls "regardless of state law or the dictates of decedent's will". This suggestion is contrary to the decided cases and particularly to the view we expressed in Estate of Hubert v. Commissioner, 101 T.C. 31

ents to numerical equivalents, petitioner and respondent would apply discounts of 50 percent and 9.5 percent, respectively. Property is generally included in the gross estate at its fair market value on the date of a decedent's death. Sec. 2031(a);2 sec. 20.2031-1(b), Estate Tax Regs. Fair market value is defined as "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable 2 Un

20.2056(d)-1, Estate Tax Regs. Under section 2518, if a qualified disclaimer is determined to have been made by the surviving spouse, then for purposes of subtitle B--dealing with estate and gift taxes--the property interest disclaimed is treated as if it had never been transferred to the surviving spouse. Sec. 2518(a); sec. 25.2518-1(b), Gift

Whether the Fact That CSB Was the Beneficiary Under the Life Insurance Policies Determines Whether the Payments to Decedent's Estate Were To Redeem Stock or for Work in Process Petitioner argues that, under section 20.2031-2(f)(2), Estate Tax Regs.,7 Estate of Huntsman v.

, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit. - 54 - 546, 551 (1973); Amerada Hess Corp. v. Commissioner, 517 F.2d at 83; Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989); sec. 20.2031-1(b), Estate Tax Regs. The buyer and the seller are hypothetical, and their characteristics are not necessarily the same as the personal characteristics of the actual seller or of a particular buyer. Propstra v. United States, 680 F.2d 12

T.C. Memo. 1995-255. Property includable in a decedent's gross estate is included at its fair market value on either: (1) The date of the decedent's death or (2) the alternate valuation date as provided under section 2032. Secs. 2031(a) and 2032(a); sec. 20.2031-1(b), Estate Tax Regs. Fair market value is a question of fact. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (1944); Helvering v. National Grocery Co., 304 U.S. 282, 294 (1938). Fair market value represents the price that

20.2031-2(e), Estate Tax Regs. If selling prices for stock are unavailable, then we decide its fair market value by considering factors such as the company's net worth, earning power, dividend-paying capacity, management, goodwill, position in the industry, the economic outlook in its industry, and the values of publicly traded stock of compar

Section 20.2031-1(b), Estate Tax Regs., defines fair market value as: “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.” Future events that were reasonably foreseeable at the valuation date ma

tance, style, and quality among the appraisal reports presented by each party. 2. Property Valuation Property includable in a decedent's gross estate is generally reported at its fair market value on the date of the decedent's death. Sec. 2031(a);1 sec. 20.2031-1(b), Estate Tax Regs. Fair market value is the "price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of rel

20.2031-1(b), Estate Tax Regs.; see also Estate of Jung v. Commissioner, supra at 430-432; Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990). As this Court stated in Estate of Jung v. Commissioner, supra at 431-432: for purposes of determining fair market value, we believe it appropriate to consider sales of properties occurring subs

20.2031-1(b), Estate Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973); Estate of Watts v. Commissioner, supra at 486; Estate of Bright v. United States, 658 F.2d 999, 1005-1006 (5th Cir. 1981); Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990). It would be inappropriate for us at this juncture to limit our co

20.2056(c)-1(a)(5), Estate Tax Regs. Thus, if we find that the Bard property was decedent’s separate property, - 18 - the full value of that property is includable in the gross estate, and the marital deduction equals one-third. If we find that the Bard property was community property, then only one-half of the value of that property is inclu

20.2031-1(b), Estate Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973); Kolom v. Commissioner, 644 F.2d 1282, 1288 (9th Cir. 1981), affg. 71 T.C. 235 (1978); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). The willing buyer and the willing seller are hypothetical persons, rather than specific individuals or ent

minal Corp. v. Commissioner, 60 T.C. 80, 87-88 (1973), affd. without published opinion 500 F.2d 1400 (3d Cir. 1974). - 9 - willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Sec. 20.2031-1(b), Estate Tax Regs.; see also Bankers Trust Co. v. United States, 207 Ct. Cl. 422, 437, 518 F.2d 1210, 1219 (1975). Where the property to be valued consists of corporate stock that is listed on an established securities market, the ave