-62-
in Estate of Harper v. Commissioner, T.C. Memo. 2002-121. Estate
of Thompson v. Commissioner, supra at 378-381. As we explained
with respect to the situation before us in Estate of Harper v.
Commissioner, supra:
to call what occurred here a transfer for consideration
within the meaning of section 2036(a), much less a
transfer for an adequate and full consideration, would
stretch the exception far beyond its intended scope.
In actuality, all decedent did was to change the form
in which he held his beneficial interest in the
contributed property. We see little practical
difference in whether the Trust held the property
directly or as a 99-percent partner (and entitled to a
commensurate 99-percent share of profits) in a
partnership holding the property. Essentially, the
value of the partnership interest the Trust received
derived solely from the assets the Trust had just
contributed. Without any change whatsoever in the
underlying pool of assets or prospect for profit, as,
for example, where others make contributions of
property or services in the interest of true joint
ownership or enterprise, there exists nothing but a
circuitous “recycling” of value. We are satisfied that
such instances of pure recycling do not rise to the
level of a payment of consideration. To hold otherwise
would open section 2036 to a myriad of abuses
engendered by unilateral paper transformations.
Respondent contends that the instant case features the genre
of value recycling described in Estate of Harper v. Commissioner,
supra, and subsequent cases such as Estate of Strangi v.
Commissioner, T.C. Memo. 2003-145. Respondent, stressing that
decedent enjoyed all incidents of ownership related to the
contributed stock both before and after the transfers (e.g., the
right to the income generated, the right to sell the stock and
reinvest the proceeds, the right to vote the shares), maintains
Page: Previous 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 NextLast modified: May 25, 2011