HomeMy WebLinkAbout07-10-81
.
ex>
-
(")
s:~
:'3:~
VJ I
~~;! 5?\
ie ~1
~::i:;,~~
:;1J~
,.,'C">
{.'1tQ
;;; :;u
-~O
",;""V'\
-......
o
~ ";
, "._f' ::J::t
'x'
~
0
'?'
,--I Z r-.
Cf.l~
,::C:> ~f:t..l \J.l f- <{
~H 00 a:: w -
H:>i 8 f:t..l <~ w Z
0: ~
P4Cf.l P4 8 W J f-
zZ ~ zZ iJJ :J
ZZO fil Ofil u.. I- 0 >-
OfilH ~ HS o <( Z 11l
~ ClI Cf.l 8Cf.l ;z: 11l 0 Z
, H(") . ,::CCf.l <( >- u z
C5 ..:>00 fil 8fil ~~ w W
U:>-tH\O HCJ)~ iJJ 0-
800 fil UCf.l~ W 0: :t e>
f:t..lZ I U ,::C8 Z 0 f- 0:
0;::J800 ~ g5~r~ ~ I- 0:
Op:::,r- 0 ::>
p:::, U ~ z m
8U;::J1 t!J f:t..lOU 11l
p:::, O~ p:::,Z W ;;j
;::JOUN f:t..l Zf:t..l~ J 0:
OZ 0 o 8 0 0:
U,:C- . HHH <(
HCf.lO .. fil 8~O:: ::t
~l~p:::,ZZ fil 8 Hfilfil
~ \i\ ~ fi1 p:::, ,::C 8Cl1o.::
8~~ 8 filP4Z
~P4H Z Cf.l P4~H
~~g5~ H ;:il
~
fj..),Ili Q/A.r FeC2f/' t>M; C 5-1'
'SOh", D;'Cie"..,. R4~ ~:r.y.
'1! 1 ~O Ir.rt, ;;..~ c " uti !{,.f'. Hti _i;S;: t.'I-.r; .
;< 3 f{ -/73/
,"
IN RE:
) IN THE COURT OF CO~mON PLEAS OF
) CUMBERLAND COUNTY, PENNSYLVANIA
)
) ORPHANS' COURT DIVISION
)
) FILE NO. 21-78-0683
ESTATE OF GRACE E. HEMPT
DECREE
AND NOW, this f'l'-day of
~ ' 1981, upon con-
sideration of the attached Petition, the prayer of the Petitioner
is granted, and a Citation is hereby directed to be issued to
the Honorable Mary C. Lewis, Register of wills of Cumberland
County, to show cause why the Appeal of Robert H. Kalbach from
the Appraisement for inheritance tax purposes dated June 4,
1981, on the Estate of Grace E. Hempt, deceased, should not
be sustained, and the inheritance tax be assessed at the appli-
cable rates on the clear value of the Estate as shown on Petitioner's
Report and Appraisal thereof filed on September 6, 1979.
Returnable according to
{i~.llur2l;
THE COURT:
!trj/ d q;3~a.I'b'.~y
.~/
",..V;'; .1J4I
~. 1/ {TV
~
J.
CLECKNER a FEAREN
ATTORNEYS AY LAW
HARRISBURG, PENNSYLVANIA
BOOK 108 PAGE 628
.
,
IN RE:
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ESTATE OF GRACE E. HEMPT
ORPHANS' COURT DIVISION
FILE NO. 21-78-0683
PETITION FOR CITATION SUR APPEAL FROM
ASSESSMENT OF INHERITANCE TAX
TO THE HONORABLE, THE JUDGES OF THE SAID COURT:
AND NOW, comes the Petitioner, Robert H. Kalbach, by
his attorneys, Cleckner and Fearen, and files this Petition,
averring in support thereof as follows:
1. Your Petitioner, Robert H. Kalbach, 1S an adult
individual, residing at 23 Center Drive, Camp Hill, pennsyl-
vania, and is the Executor of the Estate of Grace E. Hempt,
deceased, who died testate on December 8, 1978, letters
testamentary having been granted to him by the Register of
Wills of Cumberland County on December 18, 1978.
2. On September 6, 1978, your Petitioner filed his
Report and Appraisal of Assets of the said estate and the
Statement of Debts and Deductions for Assessment of
Inheritance Tax, as required by the Act of June 15, 1961,
P.L. 373, No. 207. Included as assets of the said estate
in the said Report and Appraisal were 6,000 shares of com-
man stock of C. A. Hempt Estate, Inc. The valuation of
CLECKNER III FEAREN
ATTORNEYS AT LAW
HARRJSBURG~ PENNSYLVANIA
Baal( 108 fAGE 619
CLECKNER a FEAREN
ATTORNEYS AT LAW
HARRISBURG. PENNSYLVANIA
of these shares is the sole disputed item in this matter
and forms the sole basis of this appeal.
3. The said C. A. Hempt Estate, Inc., is a closely
held corporation, formed on January 9, 1958, under the laws
of the Commonwealth of Pennsylvania, and has 24,000 shares
of common stock issued and outstanding, held as follows:
a. The Estate of J. F. Hempt (decedent's late
brother) - 6,000 shares;
b. The Estate of Lay T. Hempt (decedent's late
brother) - 6,000 shares;
c. The Estate of Grace E. Hempt (decedent) -
6,000 shares;
d. Max C. Hempt (decedent's nephew) - 2,000
shares;
e. Dorothy Hempt Mark (decedent's niece) -
2,000 shares;
f. Trustee for Jean D. Hempt, an incompetent
(decedent's niece) - 2,000 shares.
4. The shares of C. A. Hempt Estate, Inc., other than
those held by decedent's estate, are owned or controlled by
Max C. Hempt in the following manner:
a. The personal representative and Trustee of the
Estate of J. F. Hempt and the Estate of Lay E.
Hempt is Max C. Hempt;
8001< 108 f~GE 620
- 2 -
CLECKNER a FEAREN
ATTORNEYS AY LAW
HARRISBURG, PENNSYLVANIA
b. The Trustee for Jean D. Hempt is Max C.
Hempt:
c. Dorothy Hempt Mark is the daughter of
Max C. Hempt.
The said Max C. Hempt is a direct business competitor of
your Petitioner, the sole beneficiary of decedent's will.
5. The said C. A. Hempt Estate, Inc., has never paid
dividends from the date of its incorporation until the
present time.
6. The assets of the C. A. Hempt Estate, Inc., consist
entirely of real estate, some of which is the subject to
long-term lease arrangements at rental rates established in
1958 which extend to the year 1998.
7. On October 12, 1979, your Petitioner filed with the
Inheritance Tax Division, Department of Revenue, Commonwealth
of Pennsylvania, a Closely Held Corporate Stock Information
Report, setting forth the number and estimated value of the
shares of C. A. Hempt Estate held by decedent at the date of
death. Said Report showed a value of $15.92 per share for the
6,000 shares held by decedent, for a total of $95,520.00. Said
valuation was based upon the following:
a. The Department of Revenue approved the valuation
of a like ownership of 6,000 shares of C. A.
Hempt Estate, Inc., of $13.55 per share, as of
800K 108 ~GE 621
March 19, 1977, the date of death of Lay
T. Hempt, decedent's late brother.
b. Said valuation as of March 19, 1977, was
based on the value of the shareholder's
equity in the corporation as of that date,
of $406,190.07, and included a 20 percent
discount to reflect lack of marketability
and the minority interest.
c. The said Report of your Petitioner likewise
valued the 6,000 shares of C. A. Hempt
Estate, Inc., held by decedent in the same
manner as that approved by the Department
of Revenue, based upon the shareholder's
equity in the corporation as of the date
of death of December 9, 1978, of $477,714.68,
and including a 20 percent discount to reflect
minority interest and lack of marketability.
8. On July 3, 1980, the appraiser for the Department of
Revenue filed an appraisement for the assessment of inheritance
tax in which he increased the value of the 6,000 shares of com-
man stock of C. A. Hempt Estate, Inc., to $38.55, for a total
of $231,314.49.
9. On or about November 10, 1980, the United States
CLECKNER III FEAREN Internal Revenue Service appraised the 6,000 shares of common
ATTORNEYS AT LAW
HARRISBURG, PENNSYLVANIA
stock owned by decedent at $19.98 per share based upon the fol-
lowing:
BOOK 108 PAGE 622
- 4 -
CLECKNER a FEAREN
ATTORNEYS AT LAW
HARRISBURG, PENNSYLVANIA
a. The total book value of the corporation was
appraised at $959,186.79;
b. This value was utilized to determine a per
share value of $39.96, less a discount of
50 percent to reflect the minority interest
and lack of marketability, for a value of
$19.98 per share.
10. On August 29, 1980, your Petitioner filed a protest
with the Commonwealth Department of Revenue Board of Appeals
protesting the appraisal of the estate as set forth above.
On May 27, 1981, the said Board of Appeals issued a decision
and order, sustaining the protest in part and adjusting the
value of the shares to $31.97 per share for a total of
$191,820. Said valuation was based upon the value approved
by the United States Internal Revenue Service, but allowed
only a 20 percent discount to reflect minority interest and
lack of marketability.
11. Said valuation established by the Board of Appeals
was adopted by the Register of Wills of Cumberland County ln
a Notice of Inheritance Tax Asssessment filed on or about
June 4, 1981.
12. Your Petitioner appeals from the act of the Board of
Appeals and the Register of Wills, in fixing the value of the
said shares at $191,820, averring that the said valuation is
800K 108 PACE 623
- 5 -
erroneous for the following reasons:
a. Said valuation was arrived at without
regard to the fact that Petitioner's
valuation was based upon the identical
criteria utilized to value the same
stock in the Estate of Loy T. Hempt who
died 18 months prior to decedent, and
which method was approved by the Department
of Revenue;
b. Said valuation was arrived at without
regard to the valuation of the 6,000 shares
that was approved by the United States Inter-
nal Revenue Service on or about November 10,
1980;
c. The said valuation does not take into account
the minority nature of the 6,000 shares, their
lack of marketability, and the minority interest's
inability to force dissolution of the corporation
to obtain a pro rata share of the assets or to
exert control over the operation of the corpora-
tion;
d. Said valuation was arrived at without regard to
the nature of the assets of the corporation, the
terms of the long-term leases which encumber the
CLECKNER a FEAREN
ATTORNEYS AT LAW
HARRISBURG. PENNSYLVANIA
real property upon which the income of the corpora-
- 6 -
800K 108 fACE 624
CLECKNER a FEAREN
ATTORNEYS AT LAW
HARRISBURG, PENNSYLVANIA
ation is based, low earnings per share of the
stock, total absence of dividends during the
life of the corporation, and the continuing
interest of the person who owns or controls
a majority of this stock in maintaining a low
level of earnings;
e. Said valuation was arrived at without consider-
ation of the fact that a majority interest in
the stock of the corporation is held or controlled
by one in direct business competition with the
Petitioner.
WHEREFORE, your Petitioner prays that a citation be
issued, directed to the Honorable Mary C. Lewis, Register of
Wills of Cumberland County, Pennsylvania, to show cause why
the appeal of your Petitioner from the appraisement for
inheritance tax purposes dated June 4, 1981, with specific
reference to the value thereon of the 6,000 shares of common
stock of C. A. Hempt Estate, Inc., should not be sustained
and the value of the stock reduced to the value shown on
the report and appraisal filed by your Petitioner.
Respectfully submitted,
CLECKNER AND FEAREN
By
~:;:;-7~
, Willla. earen, Esquire .
(Attorneys for Petitioner)
- 7 -
BOOK 108 PAGE 625
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF DAUPHIN )
Personally appeared before me, a Notary Public, in and for
said Commonwealth and County, ROBERT H. KALBACH, who, being duly
sworn according to law, deposes and says that the facts set forth
in the foregoing Petition are true and correct to the best of
his knowledge.
/-^^/?' , //~?//~/~f
;C*~R A (~~0:.A .._._.._~
Robert H. Kalbach
Sworn to and subscribed
before me this :i( q t:t.. day
of
:;. -L-<--.,1A...J
"
, 1981.
. ./,; r~~+---,..t -' L"':.(. < .I
,,"\\J: "!leT;" Notary
. <:';., ,'\-'O:II~,/J/
':.~c.?'ts~~"S\
'~[ -0 :(:'~i;'iJ.. ;': ~ ~'
. " \~'~~,,::~~is9ion Expires:
.; . ../, "'~ ,0;;. ," .' ,,' :.'-
'.< 'S )'l '..' tj(; '.. ....'.'. / /
"tl'\, '~..f~.;tJ . J j 9 P;J.
, ' p U ~" <:/' /
".-"~. t'j,::.:.:;)(>:'
(~ . ad A !d 'hL7;~j
Publ c
CLECKNER a FEAREN
ATTORNEYS AT LAW
HARRISBURG, PENNSYLVANIA
BOOK 108 PAGE 626
CLECKNER III FEAREN
ATTORN~YS AT LAW
HARRISBURG. PENNSYLVANlA
CERTIFICATE OF SERVICE
I, John DiClemente, Esquire, hereby certify that I am
this 6th day of July, 1981, serving the foregoing Petition
for Citation Sur Appeal from Assessment of Inheritance Tax,
upon the persons indicated below, by first-class, United
States mail, addressed as follows:
Department of Revenue
Bureau of Field Operations
Inheritance Tax Division
P. O. Box 2970
Harrisburg, Pa. 17105
CLECKNER AND FEAREN
By
/,~ .-'\ ,/>./- , . -:;:.?
"7. y/I\~,rc ({'~i~ --"E-:~-' p
John DiClemente, Esquire
31 North Second Street
Harrisburg, Pa. 17101
(Attorneys for Petitioner)
BOOK 108 PAGE 627