                        T.C. Memo. 1996-424



                      UNITED STATES TAX COURT



  ESTATE OF VERA M. MCFARLAND, DECEASED, JO MELDRIM, PERSONAL
               REPRESENTATIVE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23704-95.                Filed September 19, 1996.



     Thomas K. Purcell and Harris L. Bonnette, Jr., for

petitioner.

     Howard P. Levine, for respondent.



                        MEMORANDUM OPINION


     LARO, Judge:   Estate of Vera M. McFarland, Deceased,

Jo Meldrim, Personal Representative, moves for partial summary

judgment, asserting that the Court must use a going concern

methodology to value a 20-percent partnership interest held by
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Vera M. McFarland at the time of her death.    Petitioner supports

its motion with the pleadings, the affidavit of Personal

Representative, numerous exhibits, and a memorandum of law.

Respondent objects to petitioner's motion.    Respondent supports

her objection with seven exhibits and the affidavit of her

counsel, Howard P. Levine.

     For the reasons stated below, we will deny petitioner's

motion.   Dollar amounts are rounded to the nearest dollar.   The

term "Decedent" refers to Vera M. McFarland.

                             Background1

     The Meldrim family has worked in the turpentine and timber

business in St. John's County, Florida, since at least

July 18, 1934, when P.J. Kemp and J.S. Meldrim were partners in a

partnership called Kemp & Meldrim.     On August 24, 1938, P.J. Kemp

sold his 50-percent interest in Kemp & Meldrim to his former

partner's father, J.W. Meldrim.

     The partnership of J.S. and J.W. Meldrim (Meldrim & Meldrim)

continued from 1938 until J.W. Meldrim's death in 1945.    When he

died, 100 percent of his interest in Meldrim & Meldrim passed to

his three children, J.S. Meldrim (34 percent), Decedent

     1
       The “facts” presented in this opinion are stated solely
for purposes of deciding the motion and are not findings of fact
for this case. Fed. R. Civ. P. 52(a); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994). Personal Representative resided in St. Augustine,
Florida, when she petitioned the Court on behalf of Decedent's
estate. We do not know where Decedent lived at the time of her
death.
                              - 3 -

(33 percent), and Helen Meldrim Janes (33 percent).   From 1945

through 1948, the three children operated the business as a

partnership, J.S. Meldrim owning 67 percent of the partnership's

interests and Decedent and Helen Meldrim Janes each owning 16.5

percent.

     On August 12, 1948, Helen Meldrim Janes sold 13.24 percent

of her 16.5-percent interest in the partnership to J.S. Meldrim

and sold the remaining 3.26 percent to Decedent.   J.S. Meldrim

and Decedent operated the resulting partnership as the Meldrim

& McFarland Partnership (the Partnership) from 1948 until the

death of J.S. Meldrim in 1969; during that period J.S. Meldrim

owned 80 percent of the Partnership's interests, and Decedent

owned the remaining 20 percent.   When J.S. Meldrim died, his

80-percent interest passed to his spouse and three daughters, his

spouse (Lillian Meldrim) receiving 50 percent of his 80-percent

interest in trust, and the other 50-percent interest being split

equally among his daughters; namely, Jo Meldrim, Personal

Representative, Winifred Apfeldorf, and Carolyn Moore.    From 1969

through 1991, Decedent had a 20-percent interest in the

Partnership, Lillian Meldrim had a 40-percent interest in trust,

Jo Meldrim had a 13-1/3-percent interest, Winifred Apfeldorf had

a 13-1/3-percent interest, and Carolyn Moore had a 13-1/3-percent

interest.
                               - 4 -

     On September 22, 1991, Decedent died leaving her 20-percent

interest in the Partnership in trust.   In connection therewith,

her will stated:

     My said executrix and trustee is hereby given full
     authority and power * * * to continue and carry on any
     business in which I am engaged at the time of my death,
     including the continuation of any partnership in which
     I may be interested at the time of my death,
     particularly the partnership with my said brother, J.S.
     Meldrim, and that to facilitate the uninterrupted
     continuance of said partnership operation, my said
     executrix and trustee is hereby designated a
     substituted partner in said partnership, if deemed
     desirable by said executrix and trustee, for and during
     the administration of my estate and said trust; * * *

     When Decedent died, the Partnership owned 5,501 acres of

land and timber in St. John's County, Florida, along with other

assets.   On petitioner's Form 706, United States Estate Tax

Return, Personal Representative reported that the fair market

value of Decedent's 20-percent interest in the partnership

equaled $533,895.   Upon audit, respondent determined that the

fair market value was $1,147,177.   Respondent valued the

20-percent interest by:   (1) Valuing the Partnership's land and

timber by reference to comparable sales, (2) adding 20 percent of

this value to 20 percent of the fair market value of the other

assets of the partnership as reported on Form 706, (3) applying a

10-percent discount to take into account Decedent's fractional

interest in the Partnership, and (4) applying a 15-percent

discount to reflect other factors such as the lack of

marketability.
                              - 5 -

     Respondent determined a deficiency of $250,534 in

petitioner's Federal estate tax.   Petitioner alleged in its

petition that it overpaid its estate tax because Decedent's

20-percent interest in the Partnership was worth $179,615, rather

than the $533,895 amount reported on Form 706.

                           Discussion

     Respondent determined the fair market value of Decedent's

interest in the Partnership by referring to sales of property

similar to the Partnership's assets.    Petitioner argues that

Estate of Watts v. Commissioner, 823 F.2d 483 (11th Cir. 1987),

affg. T.C. Memo. 1985-595, and Golsen v. Commissioner, 54 T.C.

742 (1970), affd. 445 F.2d 985 (10th Cir. 1971), require that

petitioner's partnership interest be valued under a "going

concern" methodology.

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials of phantom factual issues.

Kroh v. Commissioner, 98 T.C. 383, 390 (1992); Shiosaki v.

Commissioner, 61 T.C. 861, 862 (1974).    Rule 121(a), Tax Court

Rules of Practice and Procedure, provides that either party may

move for summary judgment in its favor upon any or all parts of

the legal issues in controversy.   A decision may be rendered by

way of summary judgment "if the pleadings, answers to

interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show
                               - 6 -

there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law."    Id. par. (b).

     Because summary judgment adjudicates an issue without the

benefit of a trial, the Court grants such a remedy cautiously and

sparingly, and only after carefully ascertaining that the moving

party has met the requisite criteria.    Associated Press v. United

States, 326 U.S. 1, 6 (1945); Espinoza v. Commissioner, 78 T.C.

412, 416 (1982).   The Court will not resolve disagreements over

material factual issues in a summary judgment proceeding.

Espinoza v. Commissioner, supra at 416; Matson Navigation Co. v.

Commissioner, 67 T.C. 938, 951 (1977).   A fact is material if it

"tends to resolve any of the issues that have been properly

raised by the parties."   10A Wright et al., Federal Practice and

Procedure:   Civil, sec. 2725, at 93 (2d ed. 1983).   The moving

party must prove that there is no genuine issue of material fact,

and factual inferences are viewed in the light most favorable to

the nonmoving party.   United States v. Diebold, Inc., 369 U.S.

654, 655 (1962); Kroh v. Commissioner, supra at 390; Preece v.

Commissioner, 95 T.C. 594, 597 (1990).

     This case is not ripe for summary judgment.   The parties

dispute the fair market value of Decedent's partnership interest.

The resolution of such a dispute is a question of fact, and the

trier of fact has the duty to weigh all relevant evidence of

value.   Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119,

123-125 (1944); Helvering v. National Grocery Co., 304 U.S. 282,
                               - 7 -

294 (1938); Estate of Watts v. Commissioner, supra at 485.     We do

not believe that we would be properly discharging our duty if we

were to set forth at this point one (and only one) method of

valuation that must be used to determine the fair market value of

Decedent's partnership interest.    See Estate of Andrews v.

Commissioner, 79 T.C. 938, 944-945 (1982).   Cases of valuation

require us to determine the price that a hypothetical willing

buyer would pay a hypothetical willing seller, both persons

having reasonable knowledge of all relevant facts and neither

person being under any compulsion to buy or to sell.   Sec.

20.2031-1(b), Estate Tax Regs.; see also United States v.

Cartwright, 411 U.S. 546, 551 (1973); Estate of Watts v.

Commissioner, supra at 486; Estate of Bright v. United States,

658 F.2d 999, 1005-1006 (5th Cir. 1981); Estate of Newhouse v.

Commissioner, 94 T.C. 193, 218 (1990).   It would be inappropriate

for us at this juncture to limit our consideration to one method

in order to determine this price.

     Petitioner relies incorrectly on the Court of Appeals for

the Eleventh Circuit's opinion in Estate of Watts v.

Commissioner, supra, to support its position that Decedent's

partnership interest must be valued under a going concern

methodology.   We do not read that opinion to compel such a

holding as a matter of law.   Although we agree with petitioner

that the facts of Estate of Watts are somewhat similar in certain

respects to the instant case, we find significant differences
                                 - 8 -

between the two cases.   For example, in Estate of Watts, the

partnership agreement provided that "The death of a partner shall

not cause the dissolution or termination of this partnership".2

In the instant case, by contrast, we find no similar provision.

Indeed, the provisions of the relevant partnership agreement are

not in the record.   Although petitioner places much emphasis on

the fact that Decedent's will allowed her trustee to continue the

Partnership following Decedent's death, we are not persuaded that

this fact is dispositive.   We note that the will allowed, but did

not require, the trustee to continue the Partnership.

     Accordingly, we will deny petitioner's motion for partial

summary judgment.3   In so doing, we have considered all arguments

by petitioner for a contrary result, and, to the extent not

discussed above, find them to be irrelevant or without merit.

     To reflect the foregoing,




     2
       The Court of Appeals for the Eleventh Circuit found this
provision to be critical to the outcome in Estate of Watts v.
Commissioner, 823 F.2d 483, 486 (11th Cir. 1987), affg. T.C.
Memo. 1985-595, stating that "the tax court's decision to value
decedent's interest as part of a going concern is amply supported
by the law governing Oregon partnerships, and the contractual
restrictions placed upon Mrs. Watts' partnership interest by the
partnership agreement".
     3
       In addition to the reasons mentioned above, we also note
that the parties dispute the substance of the Partnership's
business during the relevant years. Although the business of the
Partnership originated with turpentine and timber, much of the
Partnership's income in the years preceding Decedent's death was
derived from leases and interest.
- 9 -

             An appropriate order

        will be issued.
