1969. Respondent's motion to dismiss this case for lack of jurisdiction will be granted.

Reviewed by the Court.

An appropriate order will be entered.

DRENNEN, J., did not participate in the consideration or disposition of this case.

STERRETT, J., concurring: I concur in the result reached by the majority for the reasons set forth in my dissenting opinion in King v. Commissioner, 51 T.C. 851, 862 (1969), and only for those

reasons.

SIMPSON, J., dissenting: Here again, the Commissioner asks us to hold that because a taxpayer has filed a petition in bankruptcy, we do not have jurisdiction over the tax claims against him even though the Commissioner has not presented those claims to the bankruptcy court for adjudication. In King v. Commissioner, 51 T.C. 851 (1969), and Prather v. Commissioner, 50 T.C. 445 (1968), we adopted the principle that section 6871(b) was not intended to deprive a bankrupt of the opportunity of having a prepayment adjudication of the tax claims against him. Thus, if the tax claim is presented to the bankruptcy court for adjudication, we lack jurisdiction of it, but if the claim is not presented to that court, we will take jurisdiction of it. Today's holding by the Court unnecessarily and unwisely, in my opinion, abandons that principle.

The Court has found that because of recent changes in the bankruptcy law and rules, the bankruptcy court may take jurisdiction over claims for additions to tax and that the bankrupt may raise the issue before the bankruptcy court even though the Commissioner has not presented the claim for adjudication. For those reasons, the Court concludes that we do not have jurisdiction over such claims. Yet, it is not altogether clear that the taxpayer will always have an opportunity for an adjudication of the tax claims in the bankruptcy court. The courts have not settled the question yet as to whether the

bankruptcy court has jurisdiction over a claim for fraud or a claim for taxes arising shortly before the beginning of the bankruptcy proceeding. Compare In re Durensky, 377 F.Supp. 798, 804-805 (N.D. Tex. 1974), appeal dismissed 519 F.2d 1024 (5th Cir. 1975), with In re O'Ffill, 368 F.Supp. 345, 350-352 (D. Kan. 1973). In addition, the bankrupt cannot be expected to raise the issue in the bankruptcy court unless he has notice of the Commissioner's claim, and although the Commissioner's regulations call for him to give notice of such claim, the law is not settled as to what happens if he neglects to give such notice in sufficient time for the bankrupt to raise the matter before the bankruptcy court. Compare In re Statmaster Corp., 465 F.2d 978, 981 (5th Cir. 1972), and In re O'Ffill, supra, with Bostwick v. United States, 521 F.2d 741, 746 (8th Cir. 1975); Gwilliam v. United States, 519 F.2d 407, 409-412 (9th Cir. 1975); and In re Durensky, supra.

Clearly, there are advantages in having all of the tax claims presented to the bankruptcy court for adjudication, and it would be very simple for the Commissioner to achieve that objective by presenting all of his claims to that court. However, when he fails to present a claim to that court and yet asks us to hold that we lack jurisdiction to consider the claim, I find his actions unpersuasive. I believe that we would be better advised to follow the course which we adopted in Tanner v. Commissioner, 64 T.C. 415 (1975); that is, to conclude that we have jurisdiction of the claim until or unless it is actually presented to the bankruptcy court. If it is presented to that court for adjudication, we would then entertain a motion to dismiss the matter in this Court.

ESTATE OF BRUNO BISCHOFF, Deceased, Herbert Bischoff aND ALVINA L. MARTIN, EXECUTORS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

ESTATE OF BERTHA BISCHOFF, DECEASED, Herbert Bischoff AND ALVINA L. MARTIN, EXECUTORS, PETITIONER V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket Nos. 312-72, 1035–73.

Filed October 20, 1977.

Within a very short time period, Bruno and Bertha Bischoff each created identical trusts for their joint grandchildren, naming each

other as trustee. On Bruno's and Bertha's deaths, held, the corpora
of such trusts are includable in their estates. Held, further: On the
facts, the estate tax valuation of decedents' interests in certain
partnerships is limited by the restrictive buy-sell provisions to
which the interests were subject at death. The value of another
limited partnership interest is determined, applying a discount
from asset value for minority ownership.

Charles H. Miller, Michael L. Hirschfeld, Jesse Safir, and Arthur L. Kimmelfield, for the petitioners.

Marion Westen and Peter Matwiczyk, for the respondent.

FAY, Judge: Respondent determined a deficiency in petitioners' Federal estate taxes in docket No. 312-72 in the amount of $747,719.01 and in docket No. 1035-73 in the amount of $1,010,775.40.

Other issues having been disposed of by agreement of the parties, the issues remaining for decision are:

(1) Whether the estate tax valuation of decedents' interests in F. B. Associates and Frank Brunckhorst Co. is limited to the amount provided for and paid under the partnership restrictive buy-sell provisions in effect on the date of decedents' deaths;

(2) Whether the trust corpora of certain trusts created by decedents for the benefit of their grandchildren are includable in their gross estates under either section 2036(a)(2) or 2038(a)(1);1

(3) The fair market value for purposes of the Federal estate tax of decedents' partnership interests in a real estate holding company.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

Bruno Bischoff and his wife, Bertha, were residents of Roslyn Heights, N. Y., when they died testate. Bruno died on August 1, 1967, and Bertha died on May 7, 1969. Herbert Bischoff2 and Alvina Martin, Bruno's and Bertha's only children, were appointed coexecutors of their estates. At the time of the filing of the petitions in these cases, both executors resided in New York.

At their deaths Bruno and Bertha each owned interests in two limited partnerships: Frank Brunckhorst Co., a company en

'All statutory references are to the Internal Revenue Code of 1954, as in effect at the time of decedents' deaths.

2Herbert Bischoff died in 1973.

gaged in the wholesale distribution of processed pork products, and F. B. Associates, an investment company the assets of which consisted principally of stock in two closely held pork processing companies, Boar's Head Provisions Co., Inc. (Boar's Head), and Fred Weinkauff, Inc. (Weinkauff, Inc.), and also a portfolio of marketable securities.

Bruno's and Bertha's involvement in the pork processing business began in the 1930's when Bruno, his brother-in-law Frank Brunckhorst, and Theodore Weiler organized Boar's Head and Frank Brunckhorst Co. Boar's Head conducted the pork processing activities of the business while Frank Brunckhorst Co. handled product distribution. In addition to these two companies, a third, Specsal Realty Corp. (Specsal), owned and leased to Boar's Head and Frank Brunckhorst Co. their jointly used production and distribution facility.

In the late 1940's Bruno, Frank Brunckhorst, and Theodore Weiler acquired a controlling interest in another smaller pork processing and distribution company, Weinkauff, Inc. They also acquired a controlling interest in the real estate holding company Ridgewood Provision Co., Inc. (Ridgewood), which owned the Weinkauff, Inc., plant facilities and leased those facilities to Weinkauff, Inc.

Prior to 1960, ownership of the 5,000-issued and outstanding shares of Boar's Head stock was divided among seven individuals, as follows:

Also prior to 1960, ownership of the 100 issued and outstanding shares of Weinkauff, Inc., stock was as follows:

During 1960 this pattern of stock ownership, as well as that of Specsal and Ridgewood, underwent a change. Prior to 1960, four members of the Bischoff family (Bruno, Bertha, and their two children-Herbert Bischoff and Alvina Martin), and four members of the Brunckhorst family (Frank, Lillian, and their two children-Barbara Brunckhorst Stravitz and F. Tony Brunckhorst), had been partners in a small, private investment company which was organized as a general partnership. In 1960 these eight individuals transferred to that partnership their holdings in Boar's Head and Weinkauff, Inc., and also their holdings in Specsal and Ridgewood, the respective real estate holding companies.

As a result of these transfers of minority interests by each of the transferors, the general partnership, which was the immediate predecessor of F. B. Associates (formed the following year), acquired a 75-percent stock interest in Boar's Head and Specsal, and a 51.31-percent stock interest in Weinkauff, Inc., and Ridgewood. The shares transferred to the general partnership were valued essentially at book value. For example, the then book value of Boar's Head was $1.8 million, which was nearly 8 times average earnings over the previous 5 years. The 75-percent interest transferred by the two families was thus valued at $1.35 million, to which was applied a discount for possible liabilities, bringing the total value of the Boar's Head stock transferred by the families to $1.2 million, "which was felt to be the fair value at the time."

By agreement dated August 22, 1961, the partners in the general partnership converted their partnership into a limited partnership known as F. B. Associates. Frank Brunckhorst and Bruno Bischoff, who, among the partners, were the principal operating officers of the pork processing business, became the general partners of F. B. Associates, and the remaining individuals became limited partners.

The 1961 agreement of limited partnership provided that the limited partners could sell their partnership interests or their interests in the partnership assets to members of their immediate families. This agreement was replaced in 1963 by an amended agreement of limited partnership dated as of January 1, 1963.

*Also, at this time the interest of Henry Holste in Weinkauff, Inc., was redeemed by the corporation pursuant to a restrictive shareholders' agreement. The holdings of Theodore and Renee Weiler remained unchanged.