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To constitute a bona fide sale for an adequate and full
consideration in money or money’s worth, the transfer must
have been made in good faith, and the price must have been
an adequate and full equivalent reducible to a money value.
If the price was less than such consideration, only the
excess of the fair market value of the property (as of the
applicable valuation date) over the price received by the
decedent is included in ascertaining the value of his gross
estate. [Sec. 20.2043-1(a), Estate Tax Regs.28]
See sec. 20.2036-1(a), Estate Tax Regs.
In the notice of deficiency, respondent determined that
decedent did not receive adequate and full consideration for the
FLP interests transferred to her children. Clearly, decedent did
not receive any consideration for the gifted interests. Thus,
what remains at issue is whether the daughters’ supposed payments
constituted the commensurate consideration.29
27(...continued)
Commissioner, T.C. Memo. 2002-121 (quoting Mollenberg’s Estate v.
Commissioner, 173 F.2d 698, 701 (2d Cir. 1949)).
28As the Court stated in Estate of Goetchius v.
Commissioner, 17 T.C. 495, 503 (1951):
the exemption from tax is limited to those transfers of
property where the transferor or donor has received
benefit in full consideration in a genuine arm’s-length
transaction; and the exemption is not to be allowed in
a case where there is only contractual consideration
but not “adequate and full consideration in money or
money’s worth.” * * *
29In the notice, respondent gave the estate credit for 30
percent of the value of the RMA FLP on the basis of Mr. Richard
Abraham’s settlement of his claims against decedent’s estate.
See supra note 20. Despite his position on brief that the
auditor’s determination was erroneous, respondent explains that
he is not seeking an increase in the deficiency amount.
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