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section 2036; thus, the Empak stock decedent transferred to WCB
Holdings would not be included his gross estate under section
2036(a). Moreover, if section 2036(a) does not apply to
decedent’s transfer, section 2035(a) cannot apply to the gifts he
made of WCB Holdings class A governance units to CH Trust, GC
Trust, and QTIP Trust. Essentially, the question is whether
decedent’s gross estate includes, via the application of section
2036(a), the Empak stock decedent transferred to WCB Holdings.
In order to answer this question, we must separate the true
nontax reasons for the entity’s formation from those that merely
clothe transfer tax savings motives. Legitimate nontax purposes
are often inextricably interwoven with testamentary objectives.
See, e.g., Bommer Revocable Trust v. Commissioner, T.C. Memo.
1997-380.
In 1995, decedent, while in good health, met with his
advisers, Messrs. Boyle, Bernards, and Eitel, to discuss how
Empak could remain successful and competitive. These discussions
determined that Empak needed to develop additional means for
acquiring capital to remain successful and competitive. Mr.
Bernards testified that for Empak to grow, “additional capital
other than through bank debt and through [reinvesting its]
earnings” was needed. It was believed that positioning Empak for
either a public or private offering (a corporate liquidity event)
would accomplish this goal. Decedent and his advisers discussed
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