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economic purpose or substance other than the avoidance of taxes
will be disregarded.” Gregory v. Helvering, supra at 469-470;
see also Merryman v. Commissioner, 873 F.2d 879 (5th Cir. 1989),
affg. T.C. Memo. 1988-72.
Family partnerships must be closely scrutinized by the
courts because the family relationship “so readily lends itself
to paper arrangements having little or no relationship to
reality.” Kuney v. Frank, 308 F.2d 719, 720 (9th Cir. 1962);
accord Frazee v. Commissioner, 98 T.C. 554, 561 (1992); Harwood
v. Commissioner, 82 T.C. 239, 258 (1984), affd. without published
opinion 786 F.2d 1174 (9th Cir. 1986); Estate of Kelley v.
Commissioner, 63 T.C. 321, 325 (1974); Estate of Tiffany v.
Commissioner, 47 T.C. 491, 499 (1967); see also Helvering v.
Clifford, 309 U.S. 331, 336-337 (1940). Family partnerships have
long been recognized where there is a bona fide business carried
on after the partnership is formed. See, e.g., Drew v.
Commissioner, 12 T.C. 5, 12-13 (1949). Mere suspicion and
speculation about a decedent’s estate planning and testamentary
objectives are not sufficient to disregard an agreement in the
absence of persuasive evidence that the agreement is not
susceptible of enforcement or would not be enforced by parties to
the agreement. Cf. Estate of Hall v. Commissioner, 92 T.C. 312,
335 (1989).
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