124 T.C. No. 8
UNITED STATES TAX COURT
ESTATE OF WAYNE C. BONGARD, DECEASED, JAMES A. BERNARDS, PERSONAL
REPRESENTATIVE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6141-03. Filed March 15, 2005.
In 1980, D incorporated Empak, Inc. In 1986, D
established an irrevocable stock accumulation trust (ISA
Trust) and funded it with some of his Empak stock. In the
mid-1990s it was determined by Empak’s board of directors
and advisers that pooling all of D’s family’s Empak stock in
a holding company, WCB Holdings, LLC. (WCB Holdings), would
better position Empak for a corporate liquidity event, which
was necessary to raise capital and remain competitive. On
Dec. 28, 1996, D and ISA Trust capitalized WCB Holdings by
transferring to WCB Holdings their respective shares of
Empak stock, and in exchange received WCB Holdings class A
and class B membership units. Each class of membership
units was further divided into governance and financial
units, the class A governance units being the only units
with voting rights.
On Dec. 29, 1996, D and ISA Trust formed the Bongard
Family Limited Partnership (BFLP). To capitalize BFLP, D
transferred all of his WCB Holdings class B membership units
to BFLP in exchange for a 99-percent limited partnership
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