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respondent contends that the full fair market value of the assets
decedent contributed to the partnerships is includable in
decedent’s gross estate.
Respondent argues first that the partnerships lacked economic
substance and thus should be disregarded for transfer tax purposes.
Alternatively, respondent argues because decedent retained the
economic benefit and control of the transferred assets, section
2036(a) applies so that the date-of-death value of the assets
decedent transferred to the partnerships is includable in
decedent’s gross estate. Finally, respondent asserts that if the
partnerships are recognized for estate tax purposes and if section
2036(a) does not apply, then the amount of the combined minority
and lack of marketability discounts to apply in valuing decedent’s
interests in the partnerships is less than 40 percent, as claimed
by decedent’s estate.
I. Burden of Proof
As a preliminary matter, decedent’s estate maintains that the
issues of (1) whether the partnerships are to be recognized for
estate tax purposes, and (2) the applicability of section 2036 are
new matters which were not raised in the notice of deficiency. The
estate thus concludes that the burden of proof as to those issues
is placed upon respondent. We agree.
Generally, except as otherwise provided by statute or
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