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C. Conclusion
I would approach the question of whether the value of
property transferred by a decedent is included in the gross
estate on account of section 2036 by, first, determining whether
the decedent retained lifetime possession, enjoyment, income, or
control of transferred property. Only after answering that
question in the affirmative would I proceed to determine whether
the bona fide sale exception applies to the transfer. In
determining whether the bona fide sale exception applies, I would
first determine whether the transfer was made in the ordinary
course of business, as that term is used in section 25.2512-8,
Gift Tax Regs. If not, I would determine whether the transfer
was made for full value (i.e., whether the value of the
transferred property at most equaled the cash value of the
consideration received therefor). If not, then I would find that
the value of the transferred property was included in the value
of the gross estate pursuant to section 2036. Motive would only
play the limited role I have outlined above (i.e., determining
donative intent for purposes of the ordinary-course-of-business
test).
III. Gift on Formation
The foregoing analysis suggests that, in forming a family-
owned entity (e.g., a family limited partnership), one or more of
the transfers to the entity might be deemed gifts, within the
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