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BFLP since that transfer was also a bona fide sale for adequate
and full consideration. The estate contends that the creation of
BFLP was motivated by nontax reasons. The BFLP agreement
provides that BFLP was established to “acquire, own and sell from
time to time stocks (including closely held stocks), bonds,
options, mutual funds and other securities.” At trial, Mr.
Fullmer testified that BFLP was established to provide another
layer of credit protection for decedent. Additionally, the
estate asserts that BFLP facilitated decedent’s and Cynthia
Bongard’s postmarital agreement. Messrs. Bernards and Fullmer
both also testified that BFLP was established, in part, to make
gifts. On December 10, 1997, decedent made a gift of a 7.72-
percent ownership interest in BFLP to Cynthia Bongard. This gift
was the sole transfer of a BFLP partnership interest by decedent
during his life. BFLP also never diversified its assets during
decedent’s life, never had an investment plan, and never
functioned as a business enterprise or otherwise engaged in any
meaningful economic activity.
Bona Fide Sale Exception
In determining whether the bona fide sale exception in
section 2036(a) applies to an intrafamily transaction, the
substance of the transaction is subject to a higher level of
scrutiny. See Estate of Thompson v. Commissioner, supra at 383.
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