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For this purpose, good faith requires that the transfer be made
for a legitimate and significant nontax business purpose. See
Estate of Bongard v. Commissioner, supra at 118; Estate of Rosen
v. Commissioner, T.C. Memo. 2006-115. A transaction between
family members is subject to heightened scrutiny to ensure that
the transaction is not a disguised gift. See Estate of Bigelow
v. Commissioner, supra at 969; Harwood v. Commissioner, 82 T.C.
239, 258 (1984), affd. without published opinion 786 F.2d 1174
(9th Cir. 1986).
With respect to good faith in transactions between family
members, this Court has considered whether “the terms of the
transaction differed from those of two unrelated parties
negotiating at arm’s length.” Estate of Bongard v. Commissioner,
supra at 123. The parties’ actions during the formation of RLP
contrast starkly with those that would be anticipated from
unrelated parties forming a limited partnership. Decedent and
her sons did not negotiate the terms of the RLP agreement, and
they did not retain independent counsel. Decedent (through her
revocable trust) made all contributions to RLP, and her
contributions constituted the vast bulk of her wealth. RLP was
formed with decedent and her revocable trust as the only
partners. RLP was not actually funded until nearly 3 months
after it was formed. We also note that the RLP partnership
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