Roy Rogers’ Estate in $700,000 IRS Dispute

The Internal Revenue Service is demanding more than $700,000 from the estate of the late cowboy star Roy Rogers and his widow, Dale Evans Rogers, as part of an ongoing tax dispute over the value of real estate limited partnership units they gave as gifts to their children, records show.

Details about the dispute were first made public in U.S. Tax Court filings in Virginia made just one week before Rogers’ July 6 death at age 86 from congestive heart failure at his home in Apple Valley, near Victorville.

In those papers, tax lawyers for the couple appealed an IRS demand for the additional taxes, arguing that the agency erred in demanding last April an additional $351,662 each from Rogers and his wife for the real estate gifts made to their children in 1994 and 1995.

In seeking the additional $703,324 in taxes, the agency is contending that the couple undervalued the limited partnerships--which own property in Victorville once planned as a theme park called Rogersdale, USA--by $873,214 on their tax returns.

The court records show Rogers and Evans transferred as gifts 292.5 limited partnership units in 1994 to each of their six children--Roy Rogers Jr., Cheryl Barnett, Marion Swift, Linda Johnson, Dodie Sailors and Tom Fox.

Rogers and Evans listed the taxable value of the partnerships for that year at $573,650. But the IRS valued them at $1.37 million.

In 1995, Rogers and Evans transferred another 29 units to each of their children.

In their 1995 returns, Rogers and Evans valued the partnerships given to their children that year at $29,352. The IRS valued them at $108,517.

Created in 1994, the partnership’s main asset is a 50-acre property in Victorville where the Roy Rogers and Dale Evans Museum is located and where there once were plans to develop the Rogersdale, U.S.A. theme park. The general partner is listed as Rogers Development Inc.

David Nelson, a lawyer who represents the couple, told The Times that the dispute is a straightforward disagreement over the value of the property. He said that plans for the theme park have been abandoned, adding that the case is unaffected by Rogers’ death.

An IRS spokesman said the agency does not comment on individual disputes. In a letter filed in court, the agency said that it based the valuation in part on its own appraisal.

Gift transfers to children like the ones Rogers and Evans made are a common strategy used in estate planning by people seeking to lower their tax burdens.

It also is common for couples to file separate gift tax returns to maximize benefits in California, a community property state, which is why the IRS demanded equal amounts from both Rogers and his wife.

Mitchell Miller, a Beverly Hills tax lawyer unaffiliated with the Rogers case, but who represents a number of entertainment clients, said that disputes with the IRS over the value of limited partnerships are common when they are given as gifts to children.

Taxpayers often substantially discount the value of the units because limited partners have fewer rights than if they owned a property outright and because partnership interests are not very liquid, he said.

Known as the “King of the Cowboys,” Rogers starred and sang in numerous westerns. With their signature song “Happy Trails,” Roy Rogers and Dale Evans also were among the top stars in the early days of television.