Estate of Austin Korby - Page 23

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          KPLP; rather, Austin and Edna formed KPLP in order to make a                
          testamentary transfer of their assets to their sons at a                    
          discounted value while still having access to the income from               
          those assets for their lifetime.  Instead of retaining assets               
          sufficient to provide the income they would need as their medical           
          expenses grew, Austin and Edna used KPLP in an attempt to                   
          insulate all of their income-producing assets from the estate               
          tax.  As a result, we find that the transfer of Austin’s and                
          Edna’s assets to KPLP was not a bona fide sale for full and                 
          adequate consideration.  Therefore, section 2036(a)(1) applies to           
          the KPLP assets that were contributed by Austin and Edna.  Given            
          this conclusion, we need not address respondent’s argument for              
          inclusion under sections 2036(a)(2) and 2038.                               
               KPLP’s assets were contributed as follows:                             
          Edna    Austin     Korby sons    Living Trust     Total                     
          38.26   58.46         1.28         2.00         100.00                      
          The parties agree that if section 2036 applies to the assets                
          contributed to KPLP by Austin and Edna, 58.46 percent of KPLP’s             
          value should be included in Austin’s gross estate and 38.26                 
          percent of KPLP’s value should be included in Edna’s gross                  
          estate.8  In calculating the values of the KPLP assets at                   

               8This 58.46-percent portion of KPLP’s value is includable in           
          Austin’s gross estate in addition to the 2-percent KPLP general             
          partnership interest held by the living trust, which the estate             
          does not dispute is included in Austin’s gross estate under sec.            

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Last modified: May 25, 2011