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Sigco and Minn-Kota between the two families and to minimize
estate taxes. Clearly, as both decedent and his brother owned
stock of both corporations, separation of ownership by exchanging
the stock through transfers to each other's family members at
least implies reciprocity. The estate asserts, however, that the
business purpose for exchanging the stock excepts these
transactions from the reciprocal transaction doctrine. We
disagree.
The estate contends that the business purpose was to divide
the companies and place Jay in control of Sigco and Jody in
control of Minn-Kota. Separation of the families' ownership of
Sigco and Minn-Kota, insofar as it was accomplished, was not the
main purpose of the transfers. Before the transfers, decedent's
family owned 75 percent of Sigco; after the transfers, it owned
almost 80 percent. Thus, the transfers resulted in little of the
Sigco ownership shifting from George's family to decedent's
family. Moreover, the estate's contention is proved false by the
facts that decedent transferred shares of Sigco in 1994 and 1995
to George's son Jody, and other members of George's family, and
George transferred more than 1,600 Minn-Kota shares to decedent's
son, Jay, after decedent's death.
Finally, before the transfers at issue, decedent owned 25
percent of the Sigco shares outstanding and Jay owned 50 percent;
collectively, a 75-percent majority. Therefore, the transfers at
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