McCord:
Defined-Value Gifts at the Crossroads — footnotes
1Frederic
W. Procter, 142 F2d 824 (4th Cir. 1944).
2See IRS Letter Rulings (TAMs) 200245053
(11/8/02) and 200337012 (9/12/03), and IRS Field Service Advice (FSA) 200122011
(6/4/01).
3Succession
of Charles T. McCord, Jr., 461 F3d 614 (5th Cir. 2006), rev’g and remd’g
120 TC 358 (2003).
4The taxpayers’ four sons contributed $40,000
each in exchange for roughly 0.27% general partnership interests each. At the
same time, McCord Brothers, a partnership owned equally by the four sons,
contributed assets valued at $2.478 million in exchange for the remaining LP
interests (approximately 16.6%). The taxpayers also contributed $10,000 each,
for which they received class A MIL LP interests.
5Specifically, the GST trusts were to receive a
dollar amount of FMV of MIL equal to the taxpayers’ net remaining GST tax
exemption, reduced by the dollar value of any transfer tax obligation owed by
the trusts by virtue of their assumption thereof. The sons were to receive
$6,910,933 worth of FMV of MIL interests, reduced by the dollar value of the
MIL interests given to the trusts and any transfer tax the sons owed by virtue
of their assumption thereof.
6The deficiency notices valued the interests at
$171,749 per 1% LP interest. At trial, the IRS’s expert argued for a value of $150,656.
7The taxpayers’ appraiser valued a 1%
LP interest at $89,505, the Service’s expert at $150,665. The Tax Court
majority’s valuation, as the Fifth Circuit noted, was the precise median
between the values computed by the two experts; see 461 F3d 614, at n. 23.
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