- 20 - assignees became class B limited partners). The parties’ experts agree that, if the gifted interest does not include all of petitioners’ rights as class B limited partners, the fair market value of the gifted interest is lower than it would be if the gifted interest did include all such rights. Whenever the concept of “property” is relevant for Federal tax purposes, it is State law that defines the property interest to which Federal tax consequences attach. E.g., United States v. Craft, 535 U.S. 274, 278-279 (2002) (Federal tax lien attaches to property held, under State law, as tenants by the entireties). Thus, in order to determine the Federal gift tax consequences that attach to petitioners’ assignment of the gifted interest, we look to applicable State law to determine the extent of the rights transferred. Because petitioners transferred interests in a Texas limited partnership, Texas law governs our determination in that regard. Specifically, we look to the Texas Revised Limited Partnership Act (the Act), Tex. Rev. Civ. Stat. Ann. art. 6132a-1, as in effect on the date of the gift. Under the Act, a partnership interest is personal property. Tex. Rev. Civ. Stat. Ann. art. 6132a-1, sec. 7.01 (Vernon 2001). A partnership interest is assignable in whole or in part unless the partnership agreement provides otherwise. Id. sec. 7.02(a)(1). However, an assignee of a partnership interest attains the legal status of a limited partner only if thePage: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
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