Steelcase Family Ends IRS Squabble
The $37,068 settlement of a $620,000 tax case against them over gifts of Steelcase Inc. stock they gave their children became part of a stipulated decision Judge Thomas B. Wells signed in U.S. Tax Court in Washington, D.C.
The Grand Rapids businessman said Dec. 11 that he was advised by his tax attorney, J.A. Cragwell Jr. of Grand Rapids, not to comment on the settlement. But he agreed he was pleased with the outcome.
“Would it be off base to say that?” Welch said in a telephone interview. “No, you can say that.”
He said his tax attorney “recommended to say no comment.” Cragwell said he did not “have a comment on the case at all.” An IRS spokesman said the agency would not have a comment on the agreement either.
“We don’t comment on decisions, court documents,” IRS spokesman Anthony Burke said. “Whatever our statement in the court record is, that’s our public comment. Litigation, decisions, that kind of thing, the record speaks for itself.”
The dispute with the IRS flared up when the agency ruled that the 16 shares of stock they gave each of their four children in 1997 and the 132 shares they placed in their children’s generation-skipping trusts were worth $6.66 million instead of the $3.6 million reported.
Welch, a member of the pioneering family that founded the office furniture company in 1912, and his wife complained in a petition they filed last April that the IRS failed to properly discount the stock because Steelcase was still a closely held company six years ago.
Stock in Grand Rapids-based Steelcase was not publicly traded until 1998.
A recent 10-K report filed by Steelcase with the Securities and Exchange Commission said Welch owned 4.61 million shares of company stock, or 12.4 percent of the company’s outstanding stock.
In addition, Welch is co-trustee of a trust that owns 3.76 million shares of the firm’s Class B non-voting stock and his wife is trustee of a trust that owns 274,350 shares of the Class B non-voting stock.
Over the years before 1997, the couple’s petition said, the couple had made gifts of Steelcase stock to their children.
Steelcase, which began as a maker of steel wastebaskets, has expanded since its infancy to become the world’s largest manufacturer and designer of office furniture and office workstations. The company last year reported $3.3 billion in gross revenues.
According to the couple’s petition, they relied on appraisals made for them by BDO Seidman, a nationally known accounting firm, and Management Planning Inc., to report the per-share values on the Steelcase stock they gave their children and the trusts.