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part of the consideration provided to the Rod Amlie Family to
enter into, and accept the responsibilities imposed on them
under, the 1995 FSA. We agree with the estate.
Section 2501(a) imposes a tax on the transfer of property by
gift; for purposes of this section, a gift is any transfer of
property for less than a full and adequate consideration in money
or money's worth. Sec. 2512(b). A transfer of property made in
the ordinary course of business will be considered as made for an
adequate and full consideration in money or money's worth. Sec.
25.2512-8, Gift Tax Regs. A transfer in the ordinary course of
business is one that occurs as part of "a transaction which is
bona fide, at arm's length, and free from any donative intent".
Id.
In deciding the section 2703 issue in the estate's favor, we
found that the 1995 FSA was a bona fide business arrangement with
terms comparable to those that might be agreed to by persons
negotiating at arm's length. We further held that the agreement
was not a device to transfer property to members of decedent's
family for less than full and adequate consideration in money or
money's worth. The $30,000 payment by the conservator to the Rod
34(...continued)
these payments de minimis, determined not to recharacterize them
as gifts.
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