Estate of Albert Strangi - Page 16

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               SFLP was validly formed under State law.  The formalities              
          were followed, and the proverbial “i’s were dotted” and “t’s were           
          crossed”.  The partnership, as a legal matter, changed the                  
          relationships between decedent and his heirs and decedent and               
          actual and potential creditors.  Regardless of subjective                   
          intentions, the partnership had sufficient substance to be                  
          recognized for tax purposes.  Its existence would not be                    
          disregarded by potential purchasers of decedent’s assets, and we            
          do not disregard it in this case.                                           
          Section 2703(a)(2)                                                          
               Section 2703(a) provides as follows:                                   
                    SEC. 2703.  (a) General Rule.--For purposes of                    
               this subtitle, the value of any property shall be                      
               determined without regard to–-                                         
                         (1) any option, agreement, or other right to                 
                    acquire or use the property at a price less than                  
                    the fair market value of the property (without                    
                    regard to such option, agreement, or right), or                   
                         (2) any restriction on the right to sell or                  
                    use such property.                                                
          Noting that a right or restriction may be implicit in the capital           
          structure of an entity, see sec. 25.2703-1(a)(2), Gift Tax Regs.,           
          respondent argues that section 2703(a)(2) applies to disregard              
          SFLP for transfer tax purposes.  Respondent further argues that             
          the SFLP agreement does not satisfy the “safe harbor” exception             
          in section 2703(b).                                                         
               Respondent’s brief states:                                             

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