-36-
decedent’s assets to the LRFLP was such a sale. We disagree. In
the context of section 2036(a), a finding of “a bona fide sale
for an adequate and full consideration in money or money’s worth”
requires that “the transfer must have been made in good faith,
and the price must have been an adequate and full equivalent
reducible to a money value.” Sec. 20.2043-1(a), Estate Tax Regs.
As this Court has recently stated, a transfer of assets to a
family limited partnership may meet this requirement if the
record establishes that: (1) The family limited partnership was
formed for a legitimate and significant nontax reason and
(2) each transferor received a partnership interest proportionate
to the fair market value of the property transferred. See Estate
of Bongard v. Commissioner, supra at 118; cf. Estate of Strangi
v. Commissioner, supra at 479 (“the proper inquiry is whether the
transfer in question was objectively likely to serve a
substantial non-tax purpose”); Estate of Thompson v.
Commissioner, 382 F.3d 367, 379-380 (3d Cir. 2004) (discussing
the lack of “legitimate business operations” in concluding that a
transfer to a family entity was not a bona fide sale), affg. T.C.
Memo. 2002-246. After analyzing the record at hand in the light
of the first prong of this test, we conclude that this test has
not been met. Given this conclusion, we do not consider the
second prong.
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