37
not make an inter vivos transfer of Sawyer's 212 shares of
Bengals stock.
C. Whether Paul Brown Received Adequate and Full Consideration
for the 117 Shares of Bengals Stock He Sold to Sawyer
Petitioner contends that Paul Brown transferred the 117
shares to Sawyer for adequate and full consideration.
Receipt of adequate and full consideration in money or
money's worth by a transferor removes property from a gross
estate. Sec. 2036(a); Merrill v. Fahs, 324 U.S. 308, 311-312
(1945); Commissioner v. Wemyss, 324 U.S. 303, 307 (1945); Estate
of Gregory v. Commissioner, 39 T.C. 1012, 1016 (1963). Section
2036(a) prevents the depletion of the transferor's gross estate
for Federal estate tax purposes where the transferor retains the
use and enjoyment of transferred assets until death. Estate of
Frothingham v. Commissioner, 60 T.C. 211, 215-216 (1973).
Respondent argues that Brown's transfer of the 117 shares to
Sawyer in 1983 was not for adequate and full consideration. We
disagree.
Brown's sale of the 117 shares of Bengals stock to Sawyer on
May 16, 1983, was part of a bona fide, arm's-length agreement.
Brown received adequate and full consideration in money or
money's worth for the stock. On May 16, 1983, the 117 shares had
a fair market value (as stipulated by the parties) of $3,305,601
($28,253 per share). Sawyer paid Brown for the 117 shares (a) by
giving him an interest-bearing $3.51 million promissory note, and
(b) by granting (at Brown's behest) an option to buy 329 shares
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