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stock, but had retained voting control, he would not
have retained “substantial present economic benefit,”
* * *. The Government points to the retention of two
“benefits.” The first of these, the power to liquidate
or merge, is not a present benefit; rather, it is a
speculative and contingent benefit which may or may not
be realized. * * *
United States v. Byrum, 408 U.S. at 132-133, 136-139, 143, 145,
149-150; fn. refs. omitted.
The Supreme Court teaches us in United States v. Byrum, 408
U.S. 125 (1972), that section 2036(a)(1) (and section 2036(a)(2))
does not apply to a transfer by an individual to an irrevocable
trust of shares of stock in certain corporations in which the
transferor owned stock,17 where such ownership gave the transferor
the ability, inter alia, to liquidate or merge such corporations
and where the powers of the independent trustee of such trust
were subject to the following rights expressly reserved by the
transferor: (1) To vote the shares of unlisted stock held in the
trust; (2) to disapprove the sale or transfer of any trust
17After the Supreme Court decided United States v. Byrum,
408 U.S. 125 (1972), Congress enacted sec. 2036(b), which is
applicable to transfers made after June 22, 1976. Sec. 2036(b)
expands the meaning of the phrase “retained * * * enjoyment of”
the transferred property for purposes of sec. 2036(a)(1).
However, sec. 2036(b) is expressly limited to the retained right
to vote shares of stock of a controlled corporation, as defined
in sec. 2036(b)(2), and has no application to decedent’s transfer
to BFLP of his nonvoting WCB Holdings class B membership units.
Thus, the effect of Byrum on the instant case is unchanged by the
enactment of sec. 2036(b). See Rev. Rul. 81-15, 1981-1 C.B. 457,
458, where the Internal Revenue Service, in reliance on the
legislative history of sec. 2036(b), acknowledged that “the
effect of Byrum * * * is not changed by the enactment of section
2036(b)” in the case of a transfer of nonvoting stock.
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