-38-
reason must be an actual motivation, not a theoretical
justification, for a limited partnership’s formation. See id.
On the basis of the credible evidence in the record, we
conclude that the transfer of decedent’s assets was not “a bona
fide sale” within the meaning of section 2036(a)(1). See Estate
of Thompson v. Commissioner, supra at 383 (transfer to a family
limited partnership is not a bona fide sale if it does not
“provide the transferor some potential for benefit other than the
potential estate tax advantages that might result from holding
assets in the partnership form”). We find that the overwhelming
reason for forming the LRFLP was to avoid Federal estate and gift
taxes and that neither decedent nor her children had any
legitimate and significant nontax reason for that formation.
Decedent and her children were not even involved in the structure
of the LRFLP. Decedent’s son-in-law knew that decedent was
wealthy and in the waning years of her life, and he approached
Feldman to structure and form the LRFLP to lower the Federal
estate and gift tax that would be assessed on her wealth and the
passing thereof. The LRFLP was structured and formed to hold
decedent’s assets and to allow the assets to pass to decedent’s
descendants with minimal tax. Any other reason that may have
been discussed by decedent’s son-in-law and Feldman at or after
the time of formation was simply a theoretical justification that
could be, and was, advanced in the event of a challenge to their
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