Tax Law Commons^™

Defined Value Clauses And Fair Market Value, Wendy G. Gerzog

All Faculty Scholarship

In Hendrix the Tax Court considered the issues of whether defined value clauses were the result of arm’s-length transactions and whether they were void as against public policy. The underlying dispute was whether the taxpayers’ transfers of the John H. Hendrix Co. stock were valued at fair market value. With a decision favoring the taxpayers, the defined value clauses in both McCord and Hendrix impede the accurate valuation of taxable gifts to family members and of deductible charitable gifts.

Valuation Discounting Techniques: Terms Gone Awry, Wendy G. Gerzog

All Faculty Scholarship

Fair market value is defined in the section 2031 Regulations. For its validity, that definition of fair market value relies on the normal definitions of its significant terms: a seller is someone who is seeking the highest price for her product and a buyer is someone who wants to obtain the lowest price for his purchase. It is only that tension that creates the realistic, and fair, market value of that asset. Indeed, without that conflict, the definition is comprised of hollow words.

In the context of family limited partnerships, terms have been misused. By utilizing the limited partnership shell, …

Sales Of Remainder Interests: Reconciling Gradow V. United States And Section 2702, Martha W. Jordan

Martha W. Jordan

This article seeks to answer the question of whether the sale of a remainder interest for its actuarial value is exempt from transfer tax. Generally, when a taxpayer sells property for its fair market value, the taxpayer has been adequately compensated and, therefore, should not be subject to transfer tax. The sale of a remainder interest, however, raises various questions that are not present when property is sold outright. The sale of a remainder interest divides the underlying property into two split-interests: the remainder interest and the retained or present interest. The fair market value of split-interests is commonly determined …

Taxation Inheritance-Computation Of Gain On Property Acquired From Estate-Date Of Acquisition

Michigan Law Review

Plaintiff was residuary legatee under the will of his father who died in 1918. The estate was administered and closed in 1920 and certain stocks and bonds were then delivered to plaintiff. Subsequently he sold the securities and in making his federal income tax return he computed his gain on the basis of 1920 values which were higher than the 1918 values. The Revenue Act of 1921 sec. 202 (a) (3), 213 provides that for the purpose of determining profit or loss from sale of property acquired by bequest, devise or descent since Feb. 28, 1913, the basis "shall he …