-29-
the bona fide sale exception is met. The transaction must have a
legitimate and significant nontax purpose as well as adequate and
full consideration. See Estate of Bongard v. Commissioner, 124
T.C. at 118.
We conclude, considering the totality of the facts and
circumstances and bearing in mind that no one factor is
necessarily determinative, that the estate has failed to show a
legitimate and significant nontax purpose for the Partnership,
and, therefore, Mrs. Erickson’s transfer of assets to the
Partnership was not a bona fide sale. The estate failed to
identify any legitimate nontax purpose, and the objective facts
indicate that no such legitimate nontax purpose existed. Because
we have found that Mrs. Erickson’s transfer was not a bona fide
sale, we need not examine whether adequate and full consideration
existed for the transfer. The exception to section 2036 for bona
fide sales for adequate and full consideration does not apply.
III. Conclusion
We have found that an implied agreement existed under which
Mrs. Erickson retained possession and enjoyment of the assets she
transferred. We have also found that the property Mrs. Erickson
contributed to the Partnership was not transferred in a bona fide
sale. Accordingly, section 2036(a)(1) applies, and the property
Mrs. Erickson transferred to the Partnership is included in her
gross estate.
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