- 14 -
Commissioner v. Wemyss, 324 U.S. 303 (1945); Estate of Gregory v.
Commissioner, 39 T.C. at 1016, or by the rules of the law of
conveyance, Helvering v. Hallock, supra at 112; see Estate of
Hartshorne v. Commissioner, 402 F.2d 592, 595 n.4 (2d Cir. 1968),
affg. 48 T.C. 882 (1967); Estate of Frothingham v. Commissioner,
60 T.C. 211, 215-216 (1973). Rather, the consideration received
is compared to the value of the property that would have been
included in the gross estate if the transfer had not occurred.
The bona fide sale exception applies when an interest in property
is transferred for sufficient consideration to prevent the
depletion of the transferor's gross estate for Federal estate tax
purposes. See Estate of Gregory v. Commissioner, supra.
In the instant case, we conclude that Decedent's transfer of
the remainder interest in her preferred stock does not fall
within the bona fide sale exception of section 2036(a).
Decedent's gross estate would be depleted if the value of the
preferred stock, in which she had retained a life interest, was
excluded therefrom. Decedent's transfer of the remainder
interest was of a testamentary nature, made when she was 80 years
old to a family-owned corporation in return for an annuity worth
more than $1 million less than the stock itself. Given our
conclusion that Decedent did not receive adequate and full
consideration under section 2036(a) for her 470 shares of Vaparo
preferred stock, we hold that her gross estate includes the date
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011