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Estate of Helen P. Richmond, Petitioner vs. Commissioner of IRS, T.C. Memo 2014-26, Filed February 11, 2014.

The Facts:

Ms. Helen Richmond passed away in December of 2005. At the time of her death, Ms. Richmond owned a 23.44% interest in a family-owned personal holding Company, Pearson Holding Company (“PHC”). As of December 2005, PHC has 2,338 shares of common stock outstanding held by 25 shareholders whose interests ranged from 0.17% to 23.61%. Ms. Richmond owned 548 of those shares (making Ms. Richmond the second largest shareholder with a 23.44% interest).

PHC’s primary assets were shares of publicly traded stocks, primarily consisting of stocks in 10 major industries, with approximately 42.8% of their holdings concentrated in four companies; Exxon Mobil, Merck & Co. Inc., General Electric CO., and Pfizer, Inc. PHC operated as a C-Corporation with its ultimate objective to provide a steady stream of income for the descendants of Frederick Pearson, while minimizing taxes. Between 1970 and 2005, PHC made regular annual dividend payments [...]

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