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The estate contends that there were “clear and compelling”
nontax motives for creating SFLP, including the provision of a
flexible and efficient means by which to manage and protect
decedent’s assets. Specifically, the estate argues that its
business purposes for forming SFLP were (1) to reduce executor
and attorney’s fees payable at the death of decedent, (2) to
insulate decedent from an anticipated tort claim and the estate
from a will contest (by creating another layer through which
creditors must go to reach assets conveyed to the partnership),
and (3) to provide a joint investment vehicle for management of
decedent’s assets. We agree with respondent that there are
reasons to be skeptical about the nontax motives for forming
SFLP.
We are skeptical of the estate’s claims of business purposes
related to executor and attorney’s fees or potential tort claims.
Mr. Gulig testified that, on various social occasions, he
consulted with a former probate judge about decedent’s
anticipated estate. Those consultations, however, were not
related in time or purpose to the formation of SFLP. In our
view, the testimony about consultation is similar to the evidence
described in Estate of Baron v. Commissioner, 83 T.C. 542, 555
(1984), affd. 798 F.2d 65 (2d Cir. 1986), to wit, the
“‘consultation’ was mere window dressing to conceal tax motives.”
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