-32-
assets. Petitioners argue that section 2036(a)(1) does not apply
because the assets were transferred in a bona fide sale for full
and adequate consideration. Alternatively, petitioners argue,
section 2036(a)(1) does not apply because decedent did not retain
the possession or enjoyment of, or the right to income from, the
transferred assets. As a second alternative, petitioners argue,
section 2036(a)(1) does not apply to all of the transferred
assets because decedent gave away a 48.5502-percent limited
partnership interest in the LRFLP more than 3 years before she
died.17 Petitioners assert that only those assets that decedent
actually owned at her death are included in her gross estate.
2. Overview of Section 2036(a)(1)
Congress has imposed a Federal estate tax on the transfer of
the taxable estate of every decedent who is a citizen or resident
of the United States. See sec. 2001. Decedent’s taxable estate
equals her gross estate less applicable deductions. See sec.
2051. Decedent’s gross estate includes the fair market value of
all property to the extent provided in sections 2031 through
2046. See sec. 2031. For purposes of this computation, the
17 Petitioners argue that decedent gave away a 48.5502-
percent limited partnership interest in the LRFLP more than 3
years before her death. Petitioners explain that decedent died
on July 14, 2000, and that the 48.5502-percent interest
corresponds to the total of the limited partnership interests
that were the subject of decedent’s gifts in 1996, 1997, and
1998. To state the obvious, decedent’s gifts in 1998 were not
more than 3 years before her death in 2000.
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