Estate of Lorraine C. Disbrow, Deceased, Martha D. Johnson, Executrix - Page 2

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          of Lorraine C. Disbrow, Deceased (decedent), is includable in her           
          gross estate under section 2036(a)(1).1  Decedent gave the                  
          residence to a newly formed, assetless general partnership whose            
          partners were decedent, her children, and her children-in-law               
          (i.e., her daughters-in-law and sons-in-law, collectively).                 
          Shortly thereafter, decedent gave all of her interest in the                
          partnership to the other partners.  Decedent continued to live at           
          the residence until she died, paying the partnership less than              
          fair rental value (FRV).  Respondent determined that the fair               
          market value of the residence is includable in decedent’s gross             
          estate because decedent until her death retained the “possession”           
          and “enjoyment” of the residence within the meaning of section              
          2036(a)(1).  We sustain that determination.  We decide this case            
          as the parties framed it, and we express no opinion on the                  
          validity of the partnership, which, as we find below, conducted             
          no business and was not operated with an intent to make a profit.           
          Nor do we consider respondent’s alternative determination that              
          decedent’s estate is not entitled to annual exclusions from gift            
          tax pursuant to section 2503(b) because decedent’s gifts were of            
          a future interest.                                                          





               1 Unless otherwise indicated, section references are to the            
          applicable versions of the Internal Revenue Code.  Rule                     
          references are to the Tax Court Rules of Practice and Procedure.            




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