Wandry v. Comr., T.C. Memo. 2012-88

(married couple gifted membership units in LLC to children and grandchildren; transfers made in accordance with dollar value of gifts and were determined by a fraction (numerator was state dollar amount and denominator was value of entire company as determined by IRS or court); IRS claimed gifts were of fixed fractional interests in LLC and, as a result, LLC unit value understated; court determined that defined value clause reallocated LLC membership units among parties in conformance with formula in which unit value as of transfer date was "unknown constant"; Proctor (142 F.2d 824 (4th Cir. 1944) not controlling; McCord (5th Cir.), Christiansen (8th Cir.) andPetter (9th Cir.) controlling, each of which involved use of a defined value clause providing that any amount later determined to exceed the stated gift value passed to charity; case appealable to 10th Cir. and notice of appeal filed in the Tax Court on August 29, 2012).