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under section 2036, (2) satisfied the bona fide sale exemption,
and (3) did not include the retention of section 2036 interests.
A. “Transfer” and Section 2036(a)
The first question is whether decedent, in fact, made a
lifetime transfer. See United States v. O’Malley, 383 U.S. 627,
631 (1966) (stating the purpose behind the predecessor to section
2036(a) was to tax all property that had been the “subject of an
incomplete inter vivos transfer”).
The term “transfer”, as used in section 2036, is broadly
defined. See Helvering v. Hallock, 309 U.S. 106, n.7 (1940);
Estate of Shafer v. Commissioner, 749 F.2d 1216, 1221-1222 (6th
Cir. 1984), affg. 80 T.C. 1145 (1983); Guynn v. United States,
437 F.2d 1148, 1150 (4th Cir. 1971) (stating that section 2036
“describes a broad scheme of inclusion in the gross estate, not
limited by the form of the transaction, but concerned with all
inter vivos transfers where outright disposition of the property
is delayed until the transferor’s death”). The interpretation of
the term “transfer” must reflect the purpose of section 2036(a),
which is to include in a decedent’s gross estate all property he
transferred but retained an interest therein during his lifetime.
See United States v. Estate of Grace, supra at 322; Ray v. United
States, 762 F.2d 1361, 1362 (9th Cir. 1985) (citing United States
v. Estate of Grace, supra at 320); Estate of Shafer v.
Commissioner, supra (citing Foster v. United States, 303 U.S.
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