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property that was held by SFLP as of the date of death had
increased in value to $11,100,922 due to the appreciation of
securities, particularly the Allen Group stock.
OPINION
We must decide whether the existence of SFLP will be
recognized for Federal estate tax purposes. Respondent argues
that, under the business purpose and economic substance
doctrines, SFLP should be disregarded in valuing the assets in
decedent’s estate. Petitioner contends that the business purpose
and economic substance doctrines do not apply to transfer tax
cases and that SFLP had economic substance and business purpose.
Taxpayers are generally free to structure transactions as
they please, even if motivated by tax-avoidance considerations.
See Gregory v. Helvering, 293 U.S. 465, 469 (1935); Yosha v.
Commissioner, 861 F.2d 494, 497 (7th Cir. 1988), affg. Glass v.
Commissioner, 87 T.C. 1087 (1986). However, the tax effects of a
particular transaction are determined by the substance of the
transaction rather than by its form. In Frank Lyon Co. v. United
States, 435 U.S. 561, 583-584 (1978), the Supreme Court stated
that “a genuine multiple-party transaction with economic
substance * * * compelled or encouraged by business or regulatory
realities, * * * imbued with tax-independent considerations, and
* * * not shaped solely by tax avoidance features” should be
respected for tax purposes. “[T]ransactions which have no
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