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transferor stood on both sides of the transaction, (2)
commingling of the transferor’s and the transferee’s funds, and
(3) the failure of the transferor actually to make a transfer.
Majority op. p. 39. Certainly, the “bona fide sale” portion of
the bona fide sale exception would exclude transfers that were
shams or based on illusory consideration. See, e.g., Wheeler v.
United States, 116 F.3d 749, 764 (5th Cir. 1997). Beyond that,
however, so long as an objective analysis demonstrates that, in
exchange for the transferred property, the transferor received
consideration with at least an equal cash value, no depletion of
the transferor’s wealth has occurred, and it is difficult to see
any policy reason to bring back into the gross estate the value
of the property transferred. As we reasoned in Estate of
Frothingham v. Commissioner, 60 T.C. 211, 215-216 (1973)
(emphasis added):
[W]here the transferred property is replaced by other
property of equal value received in exchange, there is
no reason to impose an estate tax in respect of the
transferred property, for it is reasonable to assume
that the property acquired in exchange will find its
way into the decedent’s gross estate at his death
unless consumed or otherwise disposed of in a
nontestamentary transaction in much the same manner as
would the transferred property itself had the transfer
not taken place. * * *
In short, unless replaced by property of equal
value that could be exposed to inclusion in the
decedent’s gross estate, the property transferred in a
testamentary transaction of the type described in the
statute must be included in his gross estate. * * *
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