Estate of Vera M. McFarland, Deceased, Jo Meldrim, Personal Representative, (1996)
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T.C. Memo. 1996-424UNITED STATES TAX COURT ESTATE OF VERA M. MCFARLAND, DECEASED, JO MELDRIM, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 23704-95. Filed September 19, 1996. Thomas K. Purcell and Harris L. Bonnette, Jr., for petitioner. Howard P. Levine, for respondent. MEMORANDUM OPINION LARO, Judge: Estate of Vera M. McFarland, Deceased, Jo Meldrim, Personal Representative, moves for partial summary judgment, asserting that the Court must use a going concern methodology to value a 20-percent partnership interest held by Vera M. McFarland at the time of her death. Petitioner supports its motion with the pleadings, the affidavit of Personal Representative, numerous exhibits, and a memorandum of law. Respondent objects to petitioner's motion. Respondent supports her objection with seven exhibits and the affidavit of her counsel, Howard P. Levine. For the reasons stated below, we will deny petitioner's motion. Dollar amounts are rounded to the nearest dollar. The term "Decedent" refers to Vera M. McFarland. Background1The Meldrim family has worked in the turpentine and timber business in St. John's County, Florida, since at least July 18, 1934, when P.J. Kemp and J.S. Meldrim were partners in a partnership called Kemp & Meldrim. On August 24, 1938, P.J. Kemp sold his 50-percent interest in Kemp & Meldrim to his former partner's father, J.W. Meldrim. The partnership of J.S. and J.W. Meldrim (Meldrim & Meldrim) continued from 1938 until J.W. Meldrim's death in 1945. When he died, 100 percent of his interest in Meldrim & Meldrim passed to his three children, J.S. Meldrim (34 percent), Decedent (33 percent), and Helen Meldrim Janes (33 percent). From 1945 through 1948, the three children operated the business as a partnership, J.S. Meldrim owning 67 percent of the partnership's interests and Decedent and Helen Meldrim Janes each owning 16.5 percent. On August 12, 1948, Helen Meldrim Janes sold 13.24 percent of her 16.5-percent interest in the partnership to J.S. Meldrim and sold the remaining 3.26 percent to Decedent. J.S. Meldrim and Decedent operated the resulting partnership as the Meldrim & McFarland Partnership (the Partnership) from 1948 until the death of J.S. Meldrim in 1969; during that period J.S. Meldrim owned 80 percent of the Partnership's interests, and Decedent owned the remaining 20 percent. When J.S. Meldrim died, his 80-percent interest passed to his spouse and three...
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