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Petitioners contend that the partnership must be recognized
for Federal gift tax purposes,2 and that portfolio, minority, and
lack of marketability discounts totaling 44 percent apply,
reducing the value of each of the gifts to $263,165.
Alternatively, petitioners contend that, if we do not recognize
the partnership for Federal gift tax purposes, the value of each
of the four gifts is between $429,781 and $435,291 after
application of fractional interest and transactional costs
discounts.
B. Whether To Disregard the Partnership for Gift Tax Purposes
Respondent contends that the partnership lacks economic
substance and fails to qualify as a partnership under Federal
law. See, e.g., Commissioner v. Culbertson, 337 U.S. 733, 740
(1949); Commissioner v. Tower, 327 U.S. 280, 286 (1946); Merryman
v. Commissioner, 873 F.2d 879, 882-883 (5th Cir. 1989), affg.
T.C. Memo. 1988-72.3 Petitioners contend that their rights and
legal relationships and those of their children changed
significantly when petitioners formed the partnership,
2 Petitioners contend that respondent bears the burden of
proving that the partnership should be disregarded for lack of
economic substance. We need not decide petitioners’ contention
because our findings and analysis on that issue do not depend on
which party bears the burden of proof.
3 Respondent does not contend that we should apply an
indirect gift analysis. See Kincaid v. United States, 682 F.2d
1220 (5th Cir. 1982); Shepherd v. Commissioner, 115 T.C. ____
(2000); sec. 25.2511-1(h)(1), Gift Tax Regs. Thus, we do not
consider that analysis here.
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