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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.
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