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any trade or business. The partnerships did not engage in
transactions with anyone outside the family; loans and gifts were
made to family members only. The lending activities of the
partnerships lacked any semblance of legitimate business
transactions. This exclusivity might be consistent with decedent’s
generosity towards his family members, but it was inconsistent with
any valid business operation.13 In reality, these loans continued
to be testamentary in nature, using decedent’s money as a source of
financing for the needs of individual family members, not for
business purposes.
In conclusion, we find that there was no bona fide sale for
adequate and full consideration. Consequently, we hold that the
full date-of-death value of the assets that decedent transferred
from his trusts to the Thompson and Turner Partnerships is
includable in his gross estate pursuant to section 2036(a).
13 After decedent’s death, the Turner Partnership and
Thompson Partnership continued making loans to family members.
Some of these loans included underwriting Phoebe’s $40,000 loss in
the construction of Lewisville Properties, an auto loan of $15,000
to Phoebe (since partially repaid), and a loan to Betsy’s 17-year
old grandson to purchase a lobster boat. In addition, the Turner
Partnership made loans to Betsy’s son, William, to start a rose-
growing business, and made additional loans for his business,
despite the ultimate failure of the business venture. There is
nothing to support that either Robert or Betsy made partnership
investment decisions in their children’s and grandchildren’s
ventures with the same careful consideration one would expect to be
exercised by a managing partner of a partnership having a valid
business purpose.
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