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II. Bona Fide Sale Exception
A. Introduction
Section 2036 is entitled “Transfers with retained life
estate”, and subsection (a) thereof provides the following
general rule:
SEC. 2036(a). General Rule.--The value of the
gross estate shall include the value of all property to
the extent of any interest therein of which the
decedent has at any time made a transfer (except in
case of a bona fide sale for an adequate and full
consideration in money or money's worth), by trust or
otherwise, under which he has retained for his life or
for any period not ascertainable without reference to
his death or for any period which does not in fact end
before his death--
(1) the possession or enjoyment of, or the
right to the income from, the property, or
(2) the right, either alone or in conjunction
with any person, to designate the persons who
shall possess or enjoy the property or the income
therefrom. [Emphasis added.]
Thus, even if a transferor of property retains lifetime
possession, enjoyment, income, or control of the property, the
value of the property will not show up in her gross estate if the
transfer was a bona fide sale within the meaning of the
underscored language (the bona fide sale exception).
With respect to at least that portion of the bona fide sale
exception that requires “adequate and full consideration in money
or money’s worth” (for short, sometimes, full consideration), the
identical language appears in section 2512(b), which provides
that a gift occurs when property is transferred for insufficient
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