Estate of Albert Strangi - Page 21

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          believe that decedent would give up over $3 million in value to             
          achieve those business purposes.                                            
               Nonetheless, in this case, because we do not believe that              
          decedent gave up control over the assets, his beneficial interest           
          in them exceeded 99 percent, and his contribution was allocated             
          to his own capital account, the instinctive reaction that there             
          was a gift at the inception of the partnership does not lead to a           
          determination of gift tax liability.  In a situation such as that           
          in Kincaid, where other shareholders or partners have a                     
          significant interest in an entity that is enhanced as a result of           
          a transfer to the entity, or in a situation such as Shepherd v.             
          Commissioner, 115 T.C. __, __ (2000) (slip. op. at 21), where               
          contributions of a taxpayer are allocated to the capital accounts           
          of other partners, there is a gift.  However, in view of                    
          decedent’s continuing interest in SFLP and the reflection of the            
          contributions in his own capital account, he did not transfer               
          more than a minuscule proportion of the value that would be                 
          “lost” on the conveyance of his assets to the partnership in                
          exchange for a partnership interest.  See Kincaid v. United                 
          States, supra at 1224.  Realistically, in this case, the                    
          disparity between the value of the assets in the hands of                   
          decedent and the alleged value of his partnership interest                  
          reflects on the credibility of the claimed discount applicable to           
          the partnership interest.  It does not reflect a taxable gift.              

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