- 95 - retained for his life the enjoyment of the WCB Holdings class B membership units that he transferred to BFLP within the meaning of section 2036(a)(1).7 I have serious disagreements with the majority opinion’s conclusions that decedent had the ability to cause Empak to redeem the Empak stock owned by WCB Holdings and to cause WCB Holdings to redeem the WCB Holdings class B membership units owned by BFLP. I shall discuss those disagreements below. With the foregoing in mind, I shall now address the majority opinion’s holding under section 2036(a)(1) that “an implied agreement existed that allowed decedent to retain the enjoyment of the property held by BFLP”. Majority op. p. 59. In support of that holding, the majority opinion constructs the following 7The absence of a nontax reason for the creation of an entity, standing alone, might permit disregarding that entity for Federal tax purposes under, for example, a sham analysis. However, the majority opinion does not rely on a sham analysis, or any other analysis, that would result in disregarding BFLP for Federal tax purposes. See, e.g., secs. 761(a), 7701(a)(2); cf. Moline Props., Inc. v. Commissioner, 319 U.S. 436 (1943). That is because, according to the majority opinion, “Respondent has not challenged whether BFLP is a partnership that should be recognized for tax purposes”. Majority op. p. 52 note 11. As discussed supra note 5, respondent does not argue that sec. 2036(a)(1) applies to decedent’s transfer to BFLP of his WCB Holdings class B membership units; respondent argues only that sec. 2036(a)(2) applies to that transfer. Nonetheless, the majority opinion applies sec. 2036(a)(1) in reaching its holdings with respect to the transfer at issue to BFLP. In reaching those holdings, not only does the majority opinion rely on a section of the Internal Revenue Code on which respondent does not rely, it constructs a rationale under that section which respondent does not advance and to which the Estate of Wayne C. Bongard (estate) did not have the opportunity to respond.Page: Previous 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 Next
Last modified: May 25, 2011