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not relinquished until death, the full value of the transferred
property will be included in the decedent’s gross estate.
Section 2036(a) is applicable when three conditions are met: (1)
the decedent made an inter vivos transfer of property; (2) the
decedent’s transfer was not a bona fide sale for adequate and
full consideration; and (3) the decedent retained an interest or
right enumerated in section 2036(a)(1) or (2) or (b)10 in the
transferred property which he did not relinquish before his
death.
Additionally, pursuant to section 2035(a) a decedent’s gross
estate includes the value of any property in respect of which the
decedent made a transfer or relinquished a power within 3 years
of his death if the value of such property would have been
included in the decedent’s gross estate under section 2036 but
for the decedent’s transfer of an interest in the property or the
decedent’s relinquishment of a power with respect to the
property.
This case focuses on each aspect of section 2036(a). The
estate argues that decedent’s transfer of Empak stock to WCB
Holdings and decedent’s transfer of WCB Holdings class B
membership units to BFLP: (1) did not constitute “transfers”
10 Sec. 2036(b) instructs that the retention of the right to
vote shares of a controlled corporation that were transferred by
a decedent is the retention of the enjoyment of the transferred
property.
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