Estate of W.W. Jones II, Deceased, A.C. Jones IV, Independent Executor - Page 13




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          enhanced by the contributions of decedent.  Therefore, the                  
          contributions do not reflect taxable gifts.                                 
               Because the contributions do not reflect taxable gifts, we             
          need not decide whether the period of limitations for assessment            
          of a deficiency due to a gift on formation has expired.                     
          Section 2704(b)                                                             
               Respondent determined in the statutory notice, and argues in           
          the alternative, that provisions in the partnership agreements              
          constitute applicable restrictions under section 2704(b) and must           
          be disregarded when determining the value of the partnership                
          interests that were transferred by gift.                                    
               Section 2704(b) generally states that, where a transferor              
          and his family control a partnership, a restriction on the right            
          to liquidate the partnership shall be disregarded when                      
          determining the value of the partnership interest that has been             
          transferred by gift or bequest if, after the transfer, the                  
          restriction on liquidation either lapses or can be removed by the           
          family.  Section 25.2704-2(b), Gift Tax Regs., provides that an             
          applicable restriction is a restriction on “the ability to                  
          liquidate the entity (in whole or in part) that is more                     
          restrictive than the limitations that would apply under the State           
          law generally applicable to the entity in the absence of the                
          restriction.”                                                               







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