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During December 1995, petitioners’ attorney, Robert A.
Kelley, Jr. (Attorney Kelley), who specialized in tax and estate
planning, established three separate Arizona FLPs in each of which
one couple owned a limited partnership interest of approximately
98 percent and the couple’s wholly owned corporation, as general
partner, owned the remaining 2 percent as follows:
FLP Limited Partner General Partner
Jireh LP J. Rance & J.A. Rohi Corp.
LaRhea Smith
Mustard Seed LP J. Zane & Z&S Consulting, Inc.
Shannon R. Smith
Zerubbabel LP Rhett R. & Bull Run Enters.,
Alice A. Smith Inc.
Each partnership agreement provided that partners could not
transfer a partnership interest without prior written consent of
all the other partners and that control over the partnership was
vested in the general partner (the couple’s wholly owned
corporation).
During 1995, Rance and LaRhea transferred their 51-percent
ownership interest in Beneco to Jireh Limited Partnership (Jireh).
Jireh is treated as a partnership for Federal tax purposes, and
its only asset is 501 shares of Beneco stock. Sometime after
December 20, 1995, Zane and Shannon transferred into Mustard Seed
Limited Partnership (Mustard Seed) their 249.5 shares of Beneco
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Last modified: March 27, 2008