- 47 -
Harwood v. Commissioner, 82 T.C. 239, 259 (1984), affd. without
published opinion 786 F.2d 1174 (9th Cir. 1986). There is no
evidence of any arm's-length bargaining of decedent with her
children that suggests that business purposes rather than family
relationships were the impelling considerations. Also, as noted
above, decedent's alleged contributions to the partnership
substantially exceeded her share of the partnership's losses; the
value of the services allegedly performed by the children was
relatively small compared to the value of decedent's capital
contributions; and the children allegedly received equal shares
in the partnership, although they provided substantially unequal
services.11
For all these reasons, we find that decedent did not make
any transfers to the asserted family farm partnership that were
bona fide, at arm's length, and free from donative intent.
11 We again note that in 1984 or 1985, Donald Hendrickson
began farming the family farm land formerly rented to certain
tenant farmers, and that by 1992, Donald Hendrickson was farming
substantially all the family farm land. Donald Hendrickson
testified that the other children and he were conducting this
farming as tenants; he also testified that whatever profit he
made from farming the family farm land he divided 50 percent to
decedent and 50 percent to the children.
As set forth supra p. 20, the annual gross income Garry’s
estate received from the entire family farm during 1986-93, when
substantial acreage was being farmed by Donald Hendrickson, was
far less than the farm rental income the estate received during
1979-85, when only a part of the farm was being rented to tenant
farmers. This further suggests that if the alleged family farm
partnership existed, it was not an arm’s-length arrangement.
Page: Previous 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 NextLast modified: May 25, 2011