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any funds to the other as a result of the adjusting entries.8
After-the-fact paperwork by decedent’s C.P.A. does not refute
that decedent and his children had agreed that decedent could
continue to use and control the property during his life.
d. Conclusion
We conclude that decedent and his children had an implied
agreement that decedent could continue to possess and enjoy the
assets and retain the right to the income from the assets that he
conveyed to the partnership during his lifetime.
2. Whether Decedent Transferred Property to the
Partnership in a Bona Fide Sale for Full and Adequate
Consideration
Section 2036(a) does not apply if the transfer of property
was part of a bona fide sale in exchange for full and adequate
consideration. A bona fide sale is an arm’s-length business
transaction between a willing buyer and a willing seller. See
Wheeler v. United States, 77 AFTR 2d 96-1405, 96-1411, 96-1 USTC
par. 60,226 (W.D. Tex. 1996) (value of homestead is included in
decedent’s gross estate under section 2036(a) in part because
there was no bona fide sale among family members).
8 Petitioner did not establish the accuracy of the records
that Hannah’s firm used to prepare the adjusting entries. The
parties stipulated that the adjusting entries summarized other
underlying records but not that the underlying records are
accurate or complete. Petitioner does not identify all of the
records on which the summary was based. One of the underlying
records that petitioner produced is another summary that is
extremely vague, e.g., $8,116 “Various C.E. Reichardt”.
Petitioner’s reliance on the adjusting entries is misplaced.
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