Estate of Carolyn W. Holland, Deceased, Jack K. Holland, Lewis G. Holland, Sr., and Betty H. Kann, Executors, (1997)
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Estate of Carolyn W. Holland, Deceased, Jack K. Holland, Lewis G. Holland, Sr., and Betty H. Kann, Executors, (1997)
T.C. Memo. 1997-302
UNITED STATES TAX COURT ESTATE OF CAROLYN W. HOLLAND, DECEASED, JACK K. HOLLAND, LEWIS G. HOLLAND, SR., AND BETTY H. KANN, EXECUTORS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 7397-94. Filed June 30, 1997.S. Jarvin Levison, for petitioner.Clinton M. Fried, for respondent.MEMORANDUM OPINION PARR, Judge: Respondent determined a deficiency of $388,074 in the Federal estate tax of Carolyn W. Holland (decedent), who died on November 25, 1989. Respondent also determined an -2accuracy-related penalty of $77,615 pursuant to section 6662.1 After concessions,2 the issues for decision are: (1) Whether decedent transferred the life estate she held in a house when she attempted to convey fractional fee simple interests to her children as gifts in 1984, 1985, and 1986. We hold she did. (2) Whether the 12 $10,000 annual gifts decedent made in each of the years 1985 through 1988 were transfers of present interests that qualify for the exclusion under section 2503(b). We hold they are completed transfers of present interests that may be excluded from decedent's taxable gifts, as set out below. (3) Whether 12 checks decedent wrote and delivered to her agent 4 days before she died were completed gifts, or in the alternative claims against the estate that may be deducted under section 2053(a)(3). We hold they are neither completed gifts nor claims against the estate. (4) Whether decedent had an enforceable, personal obligation to repay two transfers of $50,000 that she received from the J. Kurt Holland Residual Trust so that $100,000 -3may be deducted from the value of the gross estate under section 2053(a)(3). We hold she did not. (5) Whether the expense of 5 years of maid service may be deducted from the gross value of the estate as an administration expense pursuant to section 2053(a)(2). We hold it may not. (6) Whether petitioner is subject to an accuracy-related penalty under section 6662. We hold it is, to the extent set out below.Some of the facts have been stipulated and are so found. The stipulation of facts and attached exhibits are incorporated herein by this reference.Petitioner is the estate of Carolyn W. Holland (decedent), who died testate, on November 25, 1989, in Atlanta, Georgia (Atlanta). Lewis G. Holland, Sr. (Lewis), Betty H. Kann (Betty),3 and Jack K. Holland (Jack) (the executors) are the executors of the estate. The executors had a mailing address in Atlanta at the time the petition in this case was filed. For convenience, we present a general background section and combine our findings of fact with our opinion under each separate issue heading. A. General Background Decedent Decedent was born in Atlanta, on July 21, 1914. She was married to the late J. Kurt Holland (Holland), an attorney who practiced law in Atlanta. Decedent is survived by three -4-children, Lewis, Betty, and Jack, and by eight grandchildren. Lewis and Betty each have three children, and Jack has two children.Jack Holland Jack, the youngest son of decedent, is an attorney who formerly worked in the National Office of the Internal Revenue Service (IRS) in Washington, D.C., for 3 years. He has practiced law in Atlanta since 1973, and at the time of trial was a partner in the firm of Arnall Golden & Gregory. Jack's practice includes estate planning and general tax services.Decedent gave Jack a power of attorney on May 21, 1982. Jack is a coexecutor of decedent's estate, and cotrustee for the Carolyn W. Holland Trust (the Carolyn Trust), the eight Weinstock Trusts created by decedent's mother for decedent's grandchildren, and the J. Kurt Holland Residual Trust (the JKH Trust). He is also the agent for decedent and each of the beneficiaries of the trusts.On February 25, 1991, Jack, as one of the executors, filed a United States Estate (and Generation-Skipping Transfer) Tax Return (Form 706) with the Atlanta Service Center of the IRS.The Weinstock Property Decedent's mother, Mrs. Paula M. Weinstock (Weinstock), owned approximately 50 acres of land (the Weinstock Property) between Roswell Road and Lake Forrest Drive in Fulton County, Georgia. Decedent's father, Jack Weinstock, operated a florist business on a portion of the property facing Roswell Road. On -5-another portion of the property, with access to Lake Forrest Drive, the Weinstocks built a house.Weinstock sold approximately 2 acres of the Weinstock Property to Holland, where the Hollands built a house. Later, the Hollands gave a 1-acre portion of their property to their daughter, Betty Kann (then Koblitz), who built a house on her parcel.Sometime during the 1950's the Weinstocks gave their home and approximately 11 acres to decedent's sister, Mrs. Nathan, which she used as a residence for her family. The Weinstocks then built a smaller residence on a different portion o...See the full content of this document
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