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In what we view as an expansion of the exception contained in
section 2704(b)(3)(B), the Secretary promulgated section 25.2704-
2(b), Gift Tax Regs., which states in pertinent part: “An
applicable restriction is a limitation on the ability to liquidate
the entity (in whole or in part) that is more restrictive than the
limitations that would apply under the State law generally
applicable to the entity in the absence of the restriction.” Thus,
the question arises whether the partnership agreements involved
herein impose greater restrictions on the liquidation of KFLP and
KILP than the limitations that generally would apply to the
partnerships under State law.
Section 10.01 of the partnership agreements states in
pertinent part that the partnerships shall dissolve and liquidate
upon the earlier of December 31, 2043, or by agreement of all the
partners. Petitioners direct our attention to TRLPA section 8.01,
which provides that a Texas limited partnership shall be dissolved
on the earlier of: (1) The occurrence of events specified in the
partnership agreement to cause dissolution; (2) the written consent
of all partners to dissolution; (3) the withdrawal of a general
partner; or (4) entry of a decree of judicial dissolution. TRLPA
section 8.04 provides that, following the dissolution of a limited
partnership, the partnership's affairs shall be wound up (including
the liquidation of partnership assets) as soon as reasonably
practicable.
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