- 21 -
supra (citing Fidelity-Philadelphia Trust Co. v. Rothensies, 324
U.S. 108 (1945)).
Possession or enjoyment24 of the property transferred is
retained where there is an express or implied understanding among
the parties at the time of the transfer, even if the retained
interest is not legally enforceable.25 Estate of Harper v.
Commissioner, supra (citing Estate of Maxwell v. Commissioner, 3
F.3d 591, 593 (2d Cir. 1993), affg. 98 T.C. 594 (1992)); see also
sec. 20.2036-1(a), Estate Tax Regs. (“An interest or right is
treated as having been retained or reserved if at the time of the
transfer there was an understanding, express or implied, that the
interest or right would later be conferred.”). “The retention of
a property’s income stream after the property has been
transferred is ‘very clear evidence that the decedent did indeed
retain possession or enjoyment.’” Estate of Schauerhamer v.
24The term enjoyment is “synonymous with substantial present
economic benefit.” Estate of McNichol v. Commissioner, 265 F.2d
667, 671 (3d Cir. 1959), affg. 29 T.C. 1179 (1958); see Estate of
Reichardt v. Commissioner, 114 T.C. 144, 151 (2000).
25Whether there exists an implied agreement is a question of
fact to be determined with reference to the facts and
circumstances of the transfer and the subsequent use of the
property. Estate of Reichardt v. Commissioner, supra. And, the
taxpayer “bears the burden (which is especially onerous for
transactions involving family members) of proving that an implied
agreement or understanding between decedent and his children did
not exist when he transferred the property at issue to the trust
and to the partnership.” Id. at 151-152; see also Estate of
Hendry v. Commissioner, 62 T.C. 861 (2000).
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