- 20 -
excess of $10 million and received back a limited partnership
interest worth approximately $6.5 million, he appears to have
made a gift equal to the loss in value. (Petitioner now claims a
greater discount, as discussed below.) In analogous
circumstances involving a transfer to a corporation, the Court of
Appeals in Kincaid v. United States, 682 F.2d 1220 (5th Cir.
1982), held that there was a taxable gift and awarded summary
judgment to the Government. The Court of Appeals rejected the
discounts claimed by the taxpayer, stating that no business
person “would have entered into this transaction, * * * [thus]
the ‘moving impulse for the * * * transaction was a desire to
pass the family fortune on to others’”. Id. at 1225 (quoting
Robinette v. Helvering, 318 U.S. 184, 187-188 (1943)). The Court
of Appeals in Kincaid concluded that, while there may have been
business reasons for the taxpayer to transfer land to a family
corporation in exchange for stock, “there was no business
purpose, only a donative one, for Mrs. Kincaid to accept less
value in return than she gave up.” Id. at 1226.
In this case, the estate claims that the assets were
transferred to SFLP for the business purposes discussed above.
Following the formation of SFLP, decedent owned a 99-percent
limited partnership interest in SFLP and 47 percent of the
corporate general partner, Stranco. Even assuming arguendo that
decedent’s asserted business purposes were real, we do not
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011