Estate of Albert Strangi - Page 15

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               The nature of the assets that were contributed to SFLP                 
          supports the conclusion that management of those assets was not             
          the purpose of SFLP.  There were no operating business assets               
          contributed to SFLP.  Decedent transferred cash, securities, life           
          insurance policies, annuities, real estate, and partnership                 
          interests to SFLP.  The cash and securities approximated                    
          75 percent of the value of the assets transferred.  No active               
          business was conducted by SFLP following its formation.                     
               The actual control exercised by Mr. Gulig, combined with the           
          99-percent limited partnership interest in SFLP and the                     
          47-percent interest in Stranco, suggest the possibility of                  
          including the property transferred to the partnership in                    
          decedent’s estate under section 2036.  See, e.g., Estate of                 
          Reichardt v. Commissioner, 114 T.C. 144 (2000).  Section 2036 is            
          not an issue in this case, however, because respondent asserted             
          it only in a proposed amendment to answer tendered shortly before           
          trial.  Respondent’s motion to amend the answer was denied                  
          because it was untimely.  Applying the economic substance                   
          doctrine in this case on the basis of decedent’s continuing                 
          control would be equivalent to applying section 2036(a) and                 
          including the transferred assets in decedent’s estate.  As                  
          discussed below, absent application of section 2036, Congress has           
          adopted an alternative approach to perceived valuation abuses.              

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