- 33 -
RUWE, J., dissenting: Decedent transferred property to a
newly formed partnership in return for a 99-percent limited
partnership interest. This was done 2 months before he died, as
part of a plan to reduce tax on his estate. The estate presented
testimony to support its argument that these actions were taken
for business purposes. The trial judge clearly rejects these
arguments and describes the testimony offered by the estate as
“mere window dressing to conceal tax motives.” Majority op. p.
13. Tax savings was the only motivating factor for transferring
property to the partnership. Nevertheless, the majority
validates this scheme by valuing decedent’s 99-percent
partnership interest at 31 percent below the value of the
property that decedent transferred to the partnership.
Respondent argues that if the partnership interest that
decedent received is to be valued at 31 percent less than the
value of the property that decedent transferred to the
partnership, then the difference should be considered to be a
gift. The majority rejects respondent’s gift argument.1
1One of the reasons given by the majority for rejecting
respondent’s gift argument is “we do not believe that decedent
gave up control over the assets”. Majority op. p. 21. This
finding is inconsistent with the majority’s allowance of a 31
percent discount. If decedent owned assets worth $9,876,929,
transferred legal title to those assets to a partnership in which
he had a beneficial interest that exceeded 99 percent, and
thereafter retained control over the transferred assets, how
could the value of his property rights be 31 percent less after
(continued...)
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011