Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 47

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          participants, who were BCC’s employees and not members of                   
          decedent’s family.  We are persuaded that the ESOP participants,            
          who had no personal relationship with decedent outside of work,             
          were not the natural objects of decedent’s bounty.  Thus, the               
          Modified 1981 Agreement is not a device to pass decedent’s BCC              
          shares to either his family or the natural objects of his bounty            
          for less than adequate consideration, and the estate has                    
          satisfied section 2703(b)(2).26                                             
              We need not decide whether decedent’s designation of a                 
          below-market redemption price for his shares in the Modified 1981           
          Agreement, which was based on his understanding of BCC’s                    
          available cash after accounting for operational cash needs and              
          the obligation to repurchase the shares of the ESOP participants,           
          constitutes a bona fide business arrangement under section                  
          2703(b)(1), because we conclude that the estate has not shown               

               26 Sec. 2703(b)(2) uses the term “family”, while sec.                  
          25.2703-1(b)(1)(ii), Gift Tax Regs., uses the term “natural                 
          objects of the transferor’s bounty” when referring to transferees           
          of property for less than adequate consideration.  Sec. 20.2031-            
          2(h), Estate Tax Regs., also uses the term “natural objects                 
          of * * * [the transferor’s] bounty”.  Legislation amending sec.             
          2703(b)(2) to conform the statute’s language to the regulations             
          has twice been passed in the House of Representatives, but never            
          enacted.  See 137 Cong. Rec. 35312, 35323 (1991); 138 Cong. Rec.            
          17691, 17729 (1992); H. Rept. 102-631, at 326 (1992).  Because we           
          find that the ESOP participants were neither decedent’s family              
          nor the natural objects of his bounty, we do not reach the                  
          question of whether these terms should be treated as synonymous             
          for purposes of sec. 2703.                                                  

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