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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 the
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