- 43 -
value of assets transferred to SFLP and Stranco is includable in
decedent’s gross estate under section 2036(a)(2).
D. Existence of Consideration
Having decided that decedent retained an interest in the
assets transferred to SFLP and Stranco for purposes of section
2036(a), we evaluate whether the statute’s application may
nonetheless be avoided on the basis of the parenthetical
exception for “a bona fide sale for an adequate and full
consideration in money or money’s worth”. Availability of the
exception rests on two requirements: (1) A bona fide sale,
meaning an arm’s-length transaction, and (2) adequate and full
consideration. See Estate of Harper v. Commissioner, T.C. Memo.
2002-121. The situation before us meets neither of these
criteria.
First, no bona fide sale, in the sense of an arm’s-length
transaction, occurred in connection with decedent’s transfer of
property to SFLP and Stranco. Mr. Gulig, as decedent’s attorney
in fact, prepared the arrangement using Fortress materials in
absence of any meaningful negotiation or bargaining with other
anticipated interest-holders. He determined how the entities
would be structured and operated, what property would be
contributed, and what interests various parties would obtain
therein. Hence, decedent essentially stood on both sides of the
transaction, a fact unchanged by the manner in which the Strangi
Page: Previous 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 NextLast modified: May 25, 2011