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minority interest or lack of marketability. The disallowance of
those discounts did not call into question the economic substance
of the partnerships or raise the applicability of section 2036.
Moreover, the amount of discount for lack of control and
marketability requires different evidence than that required for
the matters first raised in the amendment to the answer.
Entitlement to the discounts requires proof that a willing buyer
would pay less for decedent’s interest in the partnerships than net
asset value because the interests did not have control over the
partnership and because there was no ready market for the sale of
the partnership interests. Evidence required to establish that the
entities should be respected for estate and gift tax purposes
includes evidence that the entities were properly established under
State law and that other formalities have been followed. Evidence
required to prove that section 2036(a) does not apply includes
evidence that decedent did not retain the enjoyment of the property
or control over who has the enjoyment of the property or that
decedent transferred the property for adequate consideration. See
infra pp. 33-49. These are new matters raised in the amendment to
the answer.
II. Whether the Turner Partnership and the Thompson Partnership
Will Be Recognized for Federal Estate Tax Purposes
Respondent contends that the Thompson Partnership and the
Turner Partnership should be disregarded for Federal tax purposes
because they lack economic substance and business purpose. “Mere
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