Estate of Lorraine C. Disbrow, Deceased, Martha D. Johnson, Executrix, (2006)

United States Tax Court

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Estate of Lorraine C. Disbrow, Deceased, Martha D. Johnson, Executrix, (2006)

T.C. Memo. 2006-34

UNITED STATES TAX COURT ESTATE OF LORRAINE C. DISBROW, DECEASED, MARTHA D. JOHNSON, EXECUTRIX, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 6739-04. Filed February 28, 2006.

Terrence E. Smolev, for petitioner. Marie E. Small, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION LARO, Judge: Petitioner petitioned the Court to redetermine a $426,377.57 deficiency that respondent determined in the Federal estate tax pertaining to the Estate of Lorraine C. Disbrow, Deceased (decedent's estate). Following concessions, we decide whether the fair market value of the residence (residence) -2of Lorraine C. Disbrow, Deceased (decedent), is includable in her gross estate under section 2036(a)(1).1 Decedent gave the residence to a newly formed, assetless general partnership whose partners were decedent, her children, and her children-in-law (i.e., her daughters-in-law and sons-in-law, collectively). Shortly thereafter, decedent gave all of her interest in the partnership to the other partners. Decedent continued to live at the residence until she died, paying the partnership less than fair rental value (FRV). Respondent determined that the fair market value of the residence is includable in decedent's gross estate because decedent until her death retained the 'possession' and 'enjoyment' of the residence within the meaning of section 2036(a)(1). We sustain that determination. We decide this case as the parties framed it, and we express no opinion on the validity of the partnership, which, as we find below, conducted no business and was not operated with an intent to make a profit. Nor do we consider respondent's alternative determination that decedent's estate is not entitled to annual exclusions from gift tax pursuant to section 2503(b) because decedent's gifts were of a future interest.

-3FINDINGS OF FACT21. Preface Some facts were stipulated. We incorporate herein by this reference the parties' stipulation of facts and the exhibits submitted therewith. We find the stipulated facts accordingly. Martha Johnson is the executrix of decedent's estate. Martha Johnson resided in Hampstead, New Hampshire, when the petition in this case was filed. 2. Decedent and Her Family Decedent was born on January 14, 1922, and she died at 7:22 a.m. on February 9, 2000, at the age of 78. She was a U.S. citizen and a resident of the Sta...

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