- 32 -
Consistent with the foregoing, we conclude that petitioners
transferred limited partnership interests to the GRAT’s trustees in
substance as in form.
II. Petitioners' Argument That the Disputed Transfers Must Be
Valued as Assignee Interests Under Section 25.2512-1, Gift Tax
Regs.
Petitioners contend, in the alternative, that the limited
partnership interests in KFLP they transferred to the GRAT’s
trustees and the limited partnership interests in KILP they
transferred to the Kerr children must be valued as assignee
interests under the willing buyer/willing seller standard
prescribed in section 25.2512-1, Gift Tax Regs. Specifically,
petitioners contend that the hypothetical willing buyer is assumed
to be an outsider who would approach the purchase of a KFLP or KILP
limited partnership interest with the understanding that he could
buy only an assignee interest and that there would be no guaranty
of admission as a limited partner.
Petitioners’ position is based on a misunderstanding of the
proper application of the willing buyer/willing seller standard.
The nature of the property interest to be valued for Federal gift
tax purposes generally is determined under State law. See Morgan
v. Commissioner, 309 U.S. 78, 80 (1940); Estate of Bright v. United
States, 658 F.2d 999, 1001 (5th Cir. 1981). Once the Court has
determined the nature or character of the property interest in
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011