- 44 - 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 discussedPage: Previous 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Next
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