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A second feature highly probative under section 2036(a)(1)
is decedent’s continued physical possession of his residence
after its transfer to SFLP. The estate maintains that any
otherwise negative implications of this circumstance are
neutralized by the fact that SFLP “charged Mr. Strangi rent” on
occupancy of the home and reported rental income on its 1994 tax
return. Decedent likewise reported a rent obligation on his
estate tax return. For accounting purposes, the accrued rent was
recorded by SFLP on its books. Yet the accrued amount was not
paid until January 1997. A residential lessor dealing at arm’s
length would hardly be content merely to accrue a rental
obligation for eventual payment more than 2 years later. As we
have remarked, accounting entries alone are of small moment in
belying the existence of an agreement for retained possession and
enjoyment. Estate of Reichardt v. Commissioner, 114 T.C. at 154-
155; Estate of Harper v. Commissioner, T.C. Memo. 2002-121.
Concerning factors that relate to use of entity funds, the
estate emphasizes that each disbursement for decedent or his
estate was accompanied by a pro rata allotment to Stranco.
Where, as here, the only interest in the partnership other than
that held by the decedent is de minimis, a pro rata payment is
hardly more than a token in nature. In these circumstances, pro
rata disbursements are insufficient to negate the probability
that the decedent retained economic enjoyment of his or her
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