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of AVLP is the rental of its real property. AVLP produces an
average annual yield of 3.3 percent of NAV.
OPINION
Gift at the Inception of the Partnerships
In an amendment to the answer, respondent contends that
decedent made taxable gifts upon contributing his property to the
partnerships. Using the value reported by decedent on his gift
tax return, respondent argues that, if decedent gave up property
worth $17,615,857 and received back limited partnership interests
worth only $6,675,156, decedent made taxable gifts upon the
formation of the partnerships equal to the difference in value.
In Estate of Strangi v. Commissioner, 115 T.C. 478, 489-490
(2000), a decedent formed a family limited partnership with his
children and transferred assets to the partnership in return for
a 99-percent limited partnership interest. After his death, his
estate claimed that, due to lack-of-control and lack-of-
marketability discounts, the value of the limited partnership
interest was substantially lower than the value of the property
that was contributed by the decedent. The Commissioner argued
that the decedent had made a gift when he transferred property to
the partnership and received in return a limited partnership
interest of lesser value. The Court held that, because the
taxpayer received a continuing interest in the family limited
partnership and his contribution was allocated to his own capital
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