Union Tribune

June 10, 2003

Kimble estate fights IRS for millions in back taxes

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — The estate of a deceased Tuscarawas County businessman is contesting a ruling that it owes more than $2 million in estate and gift taxes to the Internal Revenue Service.

When he died in 1998, Floyd E. Kimble left an estate that its executor valued at $32.2 million. But according to the IRS, the estate is worth $54.4 million.

The estate, whose executor is Doris J. Kimble, Kimble’s widow, filed a petition in U.S. Tax Court in Washington asking the IRS to re-determine the tax liability.

The IRS determined the estate owes $2.1 million in estate and gift taxes, plus another $509,000 in penalties.

The founder of Kimble Mixer Co., Kimble was one of the most successful businessmen in the county. He operated oil and gas wells, a farm, landfills and strip mines in Ohio, including the Kimble Landfill near Dover.

Much of his wealth stemmed from a $600 million breach-of-contract lawsuit his Red Hill Oil Co. won from Tenneco in 1988.

Over the years, he and his wife donated money to charities, including Malone College, on whose board of trustees Doris Kimble sat.

But one of his charities drew national controversy in the mid-1990s.

Six months after the Tenneco judgment, Kimble incorporated the Foundation for the Continuity of Mankind. The $40 million foundation based near Cadiz ran a sperm bank in Spokane, Wash.

The Spokesman-Review published an interview in 1996 with the manager of the sperm bank, who said “racial purity” and the preservation of the white race were chief concerns of the foundation.

Kimble denied that, saying the nonprofit group was interested in selecting “donors of excellent health ... of any race, religion or nationality.”

He said then that human research was only an afterthought to the original goal of the foundation: preserving plant and animal germ plasma of disease-resistant species.

The foundation also donated $400,000 one year to the Foundation for the Advancement of Man in California. That organization ran the Repository for Germinal Choice, dubbed the Nobel Sperm Bank because its founder, Robert Klark Graham, solicited donations from Nobel laureates. One donor was William B. Shockley, a physicist who maintained that whites are genetically superior to blacks.

Kimble’s multimillion-dollar estate includes real estate, stocks and bonds and cash.

In the petition, attorneys for the estate argued that the IRS failed to deduct accrued but unpaid gift taxes, which are an expense of the estate.

The petition also accused the IRS of treating loans that Kimble had made to Red Hill Farm Trust and Kimble Mixer Co. as gifts. While an estate pays taxes on gifts, it does not on loans.

“The transfers reflected the intentions of all parties that the transfers were to be loans for all purposes in accordance with the contemporaneous accounting records and the family’s normal practices,” the petition said.

Kimble Mixer Co. had repaid portions of the loans, while Red Hill Farm Trust had begun arrangements to repay portions of the loans, according to the petition.

Kimble owned one-sixth of the stock of Kimble Mixer Co., the petition said.

If the Kimble estate and the IRS prove unable to agree on the amount owed, the dispute would go to trial in Tax Court.

An attorney for the estate declined to comment beyond the information set out in the petition. As a matter of policy, the IRS does not discuss tax disputes.