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bona fide are: (1) The taxpayer’s standing on both sides of the
transaction, Estate of Hillgren v. Commissioner, T.C. Memo. 2004-
46; (2) the taxpayer’s financial dependence on distributions from
the partnership, Estate of Thompson v. Commissioner, supra;
Estate of Harper v. Commissioner, supra; (3) the partners’
commingling of partnership funds with their own, Estate of
Thompson v. Commissioner, supra, and (4) the taxpayer’s failure
to actually transfer the property to the partnership, Estate of
Hillgren v. Commissioner, supra.
Austin formed KPLP with the help of his estate lawyer but
without the involvement of his sons, who were each to be 24.5-
percent owners through trusts and who each signed the KPLP
agreement. Austin alone decided which of his and Edna’s assets
would be contributed to KPLP, the terms of the KPLP agreement,
that the living trust would receive management fees as general
partner, and whether the limited partners would receive any
distributions. In his testimony, Dennis was unfamiliar with the
terms of the KPLP agreement. He thought its terms were followed
at all times but was unsure how the management fees were to be
determined. Gary Korby, one of Dennis’s brothers, testified that
he was not aware that his father received management fees from
KPLP, that he was not represented in the formation of KPLP, and
that he did not know how he acquired his interest in KPLP,
whether by gift or otherwise. He also testified that although he
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