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Estate of Chenoweth v. Commissioner
United States Tax Court
88 T.C. 1577 (1987)
Facts
Dean Chenoweth passed away in 1982. His estate (plaintiff) filed a timely federal estate-tax return, which listed his most significant asset as all outstanding common voting stock of Chenoweth Distributing Company, Inc. That stock was valued at $2,834,033. Dean Chenoweth left 51 percent of that stock to his wife, Jenny, and 49 percent to his daughter (by a previous marriage), Kelli. There was no dispute over the value of all of the stock or over the fact that Jenny’s 51 percent interest gave her complete control over the company. When the estate filed its estate-tax return, it claimed 51 percent of the $2,834,033 should be written off as a marital deduction. However, subsequently, the estate decided that Jenny’s 51 percent of the stock was subject to a control premium of 38.1 percent and was actually worth $1,996,038, which would be deducted from the taxable amount. The government (defendant) disagreed and filed a motion for summary judgment, seeking a ruling that the 51 percent write off, as originally taken, was accurate and that the estate could not increase the value of the controlling interest in the company for writeoff purposes.
Rule of Law
Issue
Holding and Reasoning (Korner, J.)
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