- 23 -
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.
(continued...)
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011