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HomeMy WebLinkAbout07-25-80 T .' " .. IN RE ESTATE OF IN THE COURl' OF COMMON PLEAS GRACE E. HEMPT OF CUMBERLAND COUNTY, PENNSYLVANIA DECEASED ORPHANS' COURT DIVISION NO. 21-78-0683 ANSWER TO PETITION FOR CITATION SUR APPEAL FROM ASSESSMENT OF INHERITANCE TAX TO THE HONORABLE JUDGES OF SAID COURT: Respondent, the Commonwealth of Pennsylvania, Department of Revenue, by its attorney, Dorothy L. Keeney, Assistant Counsel, in answer to the petition respectfully states and avers: 1. Admitted. 2. It is denied that the Petitioner filed his updated 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, on September 6, 1978. TO the con- trary, it is averred that the Petitioner filed said Report and Statement on or about September 6, 1979. 3. Admitted. 4. Respondent is without sufficient information to either admit or deny Paragraph four, and strict proof is demanded at trial, if relevant. II .' " '. 5. Respondent is without sufficient information to either admit or deny the allegations contained in Paragraph five and strict proof is demanded at trial, if relevant. 6. It is denied that the assets of the C.A. Hempt Estate, Inc., consist entirely of real estate. Tb the contrary, it is averred that the C.A. Hempt Estate, Inc. consists of substantial cash assets in addition to real estate. 7. Admitted in part; denied in part. It is admitted that on October 12, 1979, the Petitioner filed with the Inheritance Tax Division, Department of Revenue, Commonwealth of Pennsylvania, a Closely Held Stock Information Report showing a value of $15.92 per share for the 6,000 shares held by the decedent. It is denied that the procedure set forth for the valuation was the proper procedure. Tb the contrary, it is averred that the criteria used to value the stock in the Estate of Loy T. Hemp were incorrect criteria which were not reviewed by the Bureau of Examination of the Department of Revenue, but were only valued by a county agent. 8. Admitted. 9. Admitted in part. It is admitted that the procedure alleged were followed by the United States Internal Revenue Service which appraised the 6,000 shares of common stock owned by the decedent at $19.98 per share. It is denied that the procedure followed by the Internal Revenue Service was the proper procedure for determining the amount of discount that should be followed. -2- fI .' -; 10. 11. 12. Admitted. Admitted. It is admitted that the Petitioner appeals from the act of the Board of Appeals and the Register of Wills, in fixing the value of the shares at $191,820, it is denied that the said evaluation is erroneous. To the con- trary the evaluation is proper: a. It is denied that the 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. To the contrary it is averred that the criteria 'used to value the stock in the Estate of Loy T. Hempt were incorrect criteria which were not reviewed by the Bureau of Examination of the Department of Revenue, but were only valued by the county a gent ~ b. It is denied that the said valuation was arrived at without regard to the valuation of the 6,000 shares that was approved by the United States Internal Revenue Service on or about November 10, 1980. To the contrary the valuation used by the Internal Revenue Service was the valuation used by the Board of Appeals the only difference being the amount of the dis- count which was allowed~ c. It is denied that the said valuation does not take into account -3- tt "'. '.. the minority nature of the 6,000 shares, their lack of market- ability, 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 corporation. To the contrary it is averred that a 20% discount was allowed for these very facts; d. It is denied that the 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 real property upon which the income of the corporation 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 main- taining a low level of earnings. To the contrary, it is averred that a discount of 20% was given for these factors coupled with the factors in paragraph C. It is also averred that the corporation has close to $200,000 in cash assets; e. It is denied that said valuation was arrived at without con- sideration 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. To the contrary, this factor was also taken into account in arriving at the 20% discount. -4- ". '. .. WHEREFORE, respondent prays that a citation SUR appeal from assessment of i.nheritance tax in the above-captioned matter be dismissed. Respectfully submitted, COMMONWEALTH OF PENNSYLVANIA By / /' . ,> .t.. .{v--I--~. Ku-~~v Dorothy K ney ,"Esqui~ Assistant Counsel Department of Revenue Legal Bureau P.O. Box 1874 Harrisburg, Pennsylvania 17105 -5- ~. .., .. COMMONWEALTH OF PENNSYLVANIA COUNTY OF DAUPHIN The undersigned, being duly sworn according to law, deposes and says that the averments of the foregoing Answers are true and correct to the best of his knowledge, information, and belief. ~~~~ Sworn to and subscribed before me this ~.yOf day of ~~, 1981. ~~ c?a~. ,/ NOTARY PUBLIC Therei8 C. Ostroski, Notary Pubfw: My Commission Expires Dec. 7. \981 H IrrisbulQ, PA [lauphin COIIlIl'/