"The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death-- (1) the possession or enjoyment of, or the right to the income from, the property"
Decedent transferred stock to the partnership, which stock was then pledged to secure repayment of personal obligations of the decedent
Such retained use of the transferred stock evidenced an express or implied agreement at the time of the transfer that the transferor would retain the present economic benefits of the property, thus resulting in the inclusion of the value of the stock under Section 2036(a)
Allowed decedent to provide for his children by preserving the upside potential value of the shares and keeping that growth in his children's hands and not his hands, Rejected because reason for FLP must provide the transferor some potential for benefit other than the potential estate tax advantages that might result from holding assets in the partnership form
The FLP allowed decedent to prevent a sale of the transferred stock, thus protecting the company from a sale of shares that would “undoubtedly depress the value of the shares” and avoiding the appearance that decedent was “losing confidence in the upside potential” of the company, Rejected because only the decedent transferred in shares - he could have controlled his shares by keeping them in his own name
The FLP allowed decedent “to centralize management of the family's wealth.”, However, since decedent transferred almost all of the assets, there was no pooling of family assets
And thus, partnership value adjustments are not applicable