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pursuant to a bona fide sale for adequate and full consideration.
Sec. 2036(a).
The estate contends that the Padaro Lane property that
decedent’s trust conveyed to Spindrift is not includable in
decedent’s estate by section 2036(a)(1) because: (1) Decedent
did not retain enjoyment of, or the right to the income from, the
Padaro Lane property; and (2) the transfer of the property was a
bona fide sale for adequate and full consideration.4 We disagree
for reasons discussed next.
A. Whether Decedent Retained Possession or Enjoyment of, or the
Right to the Income From, the Padaro Lane Property During
Her Lifetime
Section 2036(a)(1) does not apply unless the decedent
retains the possession or enjoyment of, or the right to the
income from, the transferred property. That requirement is met
if there is an implied agreement among the parties to the
transaction at the time of transfer that the transferor may
retain the possession or enjoyment of, or the right to the income
from, the transferred property. Estate of Thompson v.
Commissioner, 382 F.3d 367, 376 (3d Cir. 2004), affg. T.C. Memo.
2002-246; Estate of Maxwell v. Commissioner, 3 F.3d 591, 594 (2d
Cir. 1993), affg. 98 T.C. 594 (1992); Estate of Reichardt v.
Commissioner, 114 T.C. 144, 151-152 (2000). The estate contends
4 The burden of proof shifts to the Commissioner in
specified circumstances. Sec. 7491(a). However, our findings
are not affected by the burden of proof.
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