Section of Taxation Publications
  VOL. 56
NO. 2
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.

Discounting Discounts: The Tax Court’s Treatment of Family Partnership Gift Valuation in Estate of Jones v. Commissioner
Jakob Halpern


In Estate of Jones v. Commissioner, the Tax Court considered the transfer of interests in two family limited partnerships to the taxpayer’s children. The court held that the initial transfers of property to the partnership were not gifts upon formation, that the transfer of partnership interests to the taxpayer’s children were gifts rather than assignments, and that section 2704 did not apply to the transaction. Furthermore, the Tax Court reduced significantly the discounts claimed by the taxpayer when valuing the transferred interests.

Part I of this Note describes the facts of the case and summarizes the parties’ arguments in the case. Part II details the Tax Court’s decision. Part III analyzes the court’s choice to disallow certain valuation discounts claimed by the tax-payer. Part IV considers the implications of the decision on estate planning practice and valuation appraisals.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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