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Estate of Holliday v. Commissioner, 3/17/16
February 2, 2017

At issue was whether the value of the assets decedent transferred to a limited partnership (LP) was includible in the value of her gross estate pursuant to I.R.C. § 2036(a). There was an implied agreement that decedent retained the right to “the possession or enjoyment of, or the right to the income from, the property” (I.R.C. § 2036(a)(1)) she transferred to the LP. Accordingly, the second condition necessary for § 2036(a) to apply had been met. If a decedent’s transfer of the assets to the LP was a bona fide sale for adequate and full consideration, § 2036(a) did not apply. Decedent did not have a legitimate and significant nontax reason for transferring assets to the LP. The value of the assets decedent transferred to the LP should be included in the value of decedent’s gross estate pursuant to § 2036(a)(1).