Estate of Louise Paxton Gallagher, Deceased, F. Gordon Spoor, Personal Representative v. Commissioner of Internal Revenue, TC Memo 2011-148 Filed June 28, 2011, and Supplemental Memorandum Opinion issued October 11, 2011.

The Facts: 

Ms. Gallagher owned 3,970 units of Paxton Media Group, LLC (“PMG”), at the time of her death on July 5, 2004.  As of July 2004, PMG was a publishing and media company that published 28 daily newspapers, 13 paid weekly publications, and a few specialty publications, and owned and operated a television station.  Ms. Gallagher was the largest single shareholder in PMG at the time, holding 15% of PMG’s 26,439 outstanding units.

The estate filed Form 706 on September 30, 2005.  The return stated the value of Ms. Gallagher’s units as $34,936,000 or $8,800 per unit, based on a July 12, 2004, appraisal of PMG’s units performed by PMG’s president and CEO, Mr. David Michael Paxton.

The IRS selected the return for audit and [...]

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