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Decedent did not report this gift on his gift tax return filed
for taxable year 1997, as the marital gift tax exclusion was
applicable. Cynthia Bongard and decedent entered into a
postmarital agreement contemporaneously with the transfer. This
agreement was “in full discharge, settlement, and satisfaction of
all such rights and claims [either spouse may have possessed
against the other], in the event of the termination of their
marital relationship or after the death of the first of them to
die”.
E. Purpose and Function of BFLP
From its inception until decedent’s death, BFLP did not
perform any activities, never acted to diversify its assets, or
make any distributions. The WCB Holdings membership units in
BFLP were nonvoting, and decedent determined whether the Empak
shares held by WCB Holdings would be redeemed. WCB Holdings did
not redeem any of its class B membership units held by BFLP
before decedent’s death.
F. 1998 ISA Trust Distribution
In early 1998, decedent suggested that ISA Trust make
distributions to each of his children to see how maturely they
would handle the funds. A series of transactions occurred in
which Empak redeemed 52,924 of its outstanding shares from WCB
Holdings, and WCB Holdings then redeemed 21,345 of its class A
and class B financial units from ISA Trust. This redemption
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