Defined Value Clauses and Fair Market Value

4 Pages Posted: 27 Mar 2012  

Wendy C. Gerzog

University of Baltimore - School of Law

Date Written: March 26, 2012

Abstract

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.

Keywords: defined value clause, family LLC, FLP, fair market value, gift tax, Hendrix, Procter, McCord, charitable gift, American Bar Endowment

Suggested Citation

Gerzog, Wendy C., Defined Value Clauses and Fair Market Value (March 26, 2012). Tax Notes, Vol. 134, No. 13, p. 1685, March 2012; University of Baltimore School of Law Legal Studies Research Paper. Available at SSRN: https://ssrn.com/abstract=2029103

Wendy C. Gerzog (Contact Author)

University of Baltimore - School of Law ( email )

1420 N. Charles Street
Baltimore, MD 21218
United States
410-837-4522 (Phone)

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