-40-
vehicle for changing the form in which decedent held her
beneficial interest in the transferred assets. See Estate of
Harper v. Commissioner, T.C. Memo. 2002-121; see also Estate of
Bongard v. Commissioner, 124 T.C. at 128-129. Although the LRFLP
did have some minimal economic activity consisting of its receipt
of dividend and interest income, its apparent sale of a small
portion of its portfolio, and its reinvestment of the proceeds of
matured bonds, this passive activity was not significant enough
to characterize the LRFLP as a legitimate business operation, see
Estate of Thompson v. Commissioner, 382 F.3d at 379, or, as
suggested by petitioners, a true joint venture. Nor did the
LRFLP maintain the books of account required by the LRFLP
agreement (books that would have been commonplace in a true
business venture), comply with all of the other terms of the
LRFLP agreement (e.g., no capital contributions were made by any
of the partners simultaneously with the signing of the LRFLP
agreement), hold formal or documented meetings between the
general partners, or operate the way that a bona fide partnership
would have operated (e.g., while the LRFLP agreement was signed
on July 31, 1996, and a certificate of limited partnership was
filed 5 days later, the amount of each partner’s contribution to
the capital of the LRFLP was not set until October 11, 1996, at
the earliest). See Estate of Bigelow v. Commissioner, T.C. Memo.
2005-65.
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