- 85 -
See also Kimbell v. United States, 371 F.3d 257, 262 (5th Cir.
2004) (citing Wheeler v. United States, supra); Magnin v.
Commissioner, 184 F.3d 1074, 1079 (9th Cir. 1999), revg. T.C.
Memo. 1996-25; Estate of D’Ambrosio v. Commissioner, 101 F.3d
309, 312 (3d Cir. 1996), revg. and remanding 105 T.C. 252 (1995).7
7 Two commentators on the family limited partnership scene
add the following with respect to meaning of the “bona fide sale”
portion of the bona fide sale exception:
Treas. reg. section 20.2036-1 indicates that the
exception applies where there is “adequate and full
consideration.” It does not mention any requirement
that the sale also be a bona fide one. It does,
however, cross-reference Treas. reg. section
20.2043-1(a), which does appear to contemplate the need
to satisfy two conditions for the exception to apply:
that the sale be a bona fide one and that the
consideration be adequate. Nonetheless, the latter
regulation is not inconsistent with the traditional
(Wheeler’s [Wheeler v. United States, 116 F.3d 749, 764
(5th Cir. 1997)]) understanding of the exception. Its
use of the phrase “bona fide” is obviously designed to
do nothing more than make certain that the
consideration was actually supplied and not an illusory
one. Indeed, the last sentence of the provision
confirms this reading. It provides that, if the value
at the time of death of the transferred asset to be
included under section 2036 (or similar section)
exceeds the consideration received by the decedent,
only the excess is included in the gross estate. The
failure to require that the sale be a bona fide one to
qualify for treatment under this last sentence makes it
clear that it was intended to embrace the traditional
understanding of the exception.
Gans & Blattmachr, “Strangi: A Critical Analysis and Planning
Suggestions”, 100 Tax Notes 1153, 1162, n.78 (Sept. 1, 2003).
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