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attorney appointing his son as his attorney-in-fact. On August
1, 1979, the decedent’s son, acting individually and under the
power of attorney, organized a family limited partnership for
purposes of consolidating and preserving the decedent’s assets.
Some of the assets the decedent contributed included oil and gas
assets, which required active management. The decedent’s 77.8-
percent limited partnership interest and 1-percent general
partnership interest were proportionate to the value of the
property he transferred. The decedent’s sons each received 10.6-
percent general partnership interests. The decedent died on
January 14, 1980. We held that the formation of the partnership
was not a testamentary disposition for two reasons significant to
this discussion. First, the decedent received adequate and full
consideration for his transfer. Second, because the estate was
able to show that the partnership was created for the business
purpose of providing the necessary and proper management of the
decedent’s properties.
In Estate of Harper v. Commissioner, T.C. Memo. 2002-121,
the Court held the bona fide sale exception was not satisfied.
On December 18, 1990, the decedent created a revocable trust.
The trust instrument named the decedent the initial trustee. The
decedent formed a limited partnership in which his two children
received a combined 1-percent general partnership interest and
the trust received a 99-percent limited partnership interest.
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