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consideration but not “adequate and full consideration
in money or money’s worth.” * * * [Estate of Goetchius
v. Commissioner, 17 T.C. 495, 503 (1951).]
It has similarly been stated in construing the “bona fide
sale” terminology: “The word ‘sale’ means an exchange resulting
from a bargain”. Mollenberg’s Estate v. Commissioner, 173 F.2d
698, 701 (2d Cir. 1949). The foregoing interpretations have
subsequently been cited with approval in related contexts by both
this and other Federal courts. See, e.g., Bank of N.Y. v. United
States, 526 F.2d 1012, 1016-1017 & n.6 (3d Cir. 1975) (noting
that “the statutory basis for requiring an arm’s length bargain
would seem to be the requirement of a ‘bona fide’ contract”);
Estate of Morse v. Commissioner, 69 T.C. 408, 418 (1977)
(observing that judicial decisions refer to a bona fide contract
“as an arm’s-length transaction or a bargained-for exchange”),
affd. 625 F.2d 133 (6th Cir. 1980); Estate of Musgrove v. United
States, 33 Fed. Cl. 657, 663-664 (1995). From the above language
it can be inferred that applicability of the exception rests on
two requirements: (1) A bona fide sale, meaning an arm’s-length
transaction, and (2) adequate and full consideration.
On the facts before us, HFLP’s formation at a minimum falls
short of meeting the bona fide sale requirement. Decedent,
independently of any other anticipated interest-holder,
determined how HFLP was to be structured and operated, decided
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