- 19 -
In Kerr v. Commissioner, 113 T.C. 449, 464 (1999), the
taxpayers held greater than 99 percent of the partnership
interests of two family limited partnerships as general and
limited partners. The taxpayers’ children held the remaining
partnership interests, totaling less than 1 percent of overall
ownership, as general partners. The partnership agreements
provided that no person would be admitted as a limited partner
without the consent of all general partners. In 1994, the
taxpayers transferred a large portion of their limited
partnership interests to trusts for which they served as
trustees. At trial, the taxpayers argued that, although they
made these transfers to themselves as trustees, pursuant to the
family limited partnership agreement, their children as general
partners had to consent to the admission of the trustees as
limited partners. The taxpayers argued that the interests held
by the trusts should be valued as assignee interests. The Court
looked at all of the surrounding facts and circumstances in
holding that the interests that were transferred by the taxpayers
were limited partnership interests. See id. at 464.
On review of the facts and circumstances of the case at
hand, decedent, like the taxpayers in Kerr, transferred limited
partnership interests to his children rather than assignee
interests. The evidence shows that decedent intended for the
transfers to include limited partnership interests and that the
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011