TITLE

The Tax Court Does It Again: Strangi II and McCord I

AUTHOR(S)
Gallo, John J.
PUB. DATE
August 2003
SOURCE
Journal of Financial Planning;Aug2003, Vol. 16 Issue 8, p26
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This paper looks at two U.S. Tax Court decisions related to estate planning in 2003. At best, Estate of Strangi versus Commissioner, standards for the proposition that bad facts make bad law. On August 12, 1994, Strangi had been diagnosed with cancer, his son-in-law acting as Strangi's attorney-in-fact, created SFLP, a Texas limited partnership, with Stranco, a Texas corporation, as the managing general partner having the sole discretion to determine distributions. Strangi transferred assets worth $9,876,929 to SLFP for a 99 percent limited partnership interest, and $49,350 to Stranco for 47 percent of its stock. Judge Cohen rejected any gift on creation for gift tax purposes and held that Sections 2973 and 2704 did not apply. Charles and Mary McCord versus Commissioner, is a 117-page opinion of the full Tax Court in a gift tax case involving gifts of family limited partnership interests. The decision dealt with various issues, including the use of assignee interest gifts, rejection of a formula valuation clause while suggesting a type of clause that would work, date of transfer valuation principle and a detailed analysis of valuation principles. Two aspects of McCord are particularly troubling: the methodology for computing the lack of control discount and the need to determine whether the appraiser's underlying data supports the discount being selected.
ACCESSION #
10539397

 

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