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money or money’s worth, the amount of the gift is the amount by
which the value of the property transferred exceeds the value of
the property received. See sec. 2512(b).
Petitioners contend that they made gifts of limited
partnership interests and that the partnerships have economic
substance and are valid under Missouri law. Thus, they argue
that the partnerships may not be disregarded for Federal tax
purposes and that the stipulated discounts apply in determining
the value of the gifts. Petitioners further contend that,
because they did not shift economic value to the children when
they contributed the stock to the partnerships, they did not make
gifts on formation of the partnerships.
Respondent does not dispute that the partnerships are valid
under Missouri law or that the partnerships have economic
substance. Respondent contends, however, that petitioners’
transfers of the stock to the partnerships, coupled with the
transfer of limited partnership interests to the children, were
indirect gifts of the stock to the children. Accordingly,
respondent argues that the stock, and not the partnership
interests, should be valued for gift tax purposes. Respondent
argues that “the transitory allocations to petitioners’ capital
accounts, if such allocations even occurred at all, were merely
steps in integrated transactions intended to pass the stock to
the petitioners’ children in partnership form.”
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Last modified: May 25, 2011