38
of Bengals stock to Brown's sons for $1.00. The fair market
value (as stipulated by the parties) of the promissory note
Sawyer transferred to Brown was $2,029,000. The option Sawyer
granted to Brown's sons (at Brown's behest) for $1.00 had a fair
market value in 1983 (as stipulated by the parties) of at least
$1.8 million. Brown received adequate and full consideration for
the 117 shares because he transferred 117 shares worth $3.3
million to Sawyer in exchange for property worth at least $3.8
million. Sec. 2036(a). Thus, section 2036(b) does not apply to
Brown's 117 shares. Sec. 2036(a); see Hutchens Non-Marital Trust
v. Commissioner, T.C. Memo. 1993-600.
Respondent does not contend that Brown received less than
adequate and full consideration for Sawyer's 212 shares of
Bengals stock. Respondent's silence on the application of one of
the elements of section 2036(a) here is consistent with the fact
that Brown never owned Sawyer's 212 shares. Thus, one of the
three requisites for application of section 2036(a) is not met
for both the 117 shares and the 212 shares of Bengals stock.
D. Whether Decedent Made an Inter Vivos Transfer of Sawyer's
212 Shares of Bengals Stock
Respondent argues that Brown transferred the 329 shares of
Bengals stock under the interpretation of the term "transfer" in
section 2036(a) applied by the U.S. Court of Appeals for the
Sixth Circuit. Mahoney v. United States, 831 F.2d 641, 646-647
(6th Cir. 1987); Estate of Shafer v. Commissioner, 749 F.2d 1216,
1221-1222 (6th Cir. 1984), affg. 80 T.C. 1145 (1983). Respondent
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