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agreements to determine estate tax value because death gave rise
to the obligation to sell. Petitioners argue that the events
giving rise to the obligation to sell under the True buy-sell
agreements were Dave and Jean True’s decisions to sell their
respective interests in 1993 and 1994; therefore, their lifetime
transfers made subject to the buy-sell agreement restrictions
should be treated under the same standard as transfers at death
and not by the standard applied to gift transfers that do not
trigger the buy-sell provisions. We disagree.
Petitioners’ analysis strikes us as mechanical and
unreflective of the law’s development in this area. In Harwood
v. Commissioner, 82 T.C. at 260, we said: “Restrictive
provisions in a partnership agreement which limit the amount
received from the partnership by a withdrawing partner or the
estate of a deceased partner to the book value of his partnership
interest are not binding upon respondent for gift tax purposes.”
The fact that the operation of the buy-sell agreements was
triggered by Dave and Jean True’s decisions to sell their
interests in the True companies does not substantively
distinguish these cases from those in which the transferor was
not required first to offer his interest to others before making
a gift to his family. In either situation, the transferor has
retained the right to choose when and if a disposition would
occur. In the meantime, the transferor is entitled to receive
dividends or partnership distributions, and to enjoy the other
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