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http://ssrn.com/abstract=921641
 
 

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Family Limited Partnership Formation: Dueling Dicta


Mitchell Gans


Hofstra University - School of Law

Jonathan G. Blattmachr


Milbank, Tweed, Hadley & McCloy LLP


Capital University Law Review, Forthcoming
Hofstra Univ. Legal Studies Research Paper No. 06-20

Abstract:     
The IRS has invoked two gift-tax weapons in its attack on family limited partnerships: the gift-on-formation and indirect-gift arguments. While the former argument has thus far not enjoyed any success in the courts, the latter argument has been embraced by the Tax Court and the Eleventh Circuit in Shepherd and by the Eighth Circuit in Senda. Until the Eighth Circuit decision in Senda, taxpayers were able to navigate easily the indirect-gift argument by properly: sequencing the formation of the partnership and the gift of the partnership interest; or reflecting in the parent's capital account his or her contribution to the partnership. The Eighth Circuit has, however, in dicta, suggested that the indirect-gift argument can be applied in conjunction with the step transaction doctrine in order to deny discount. This article explores the partnership-formation process in light of Senda and the Eleventh Circuit's contrary dicta in Shepherd.

Number of Pages in PDF File: 17

Keywords: family, limited, partnership, discount, gift on formation, indirect gift, step transaction doctrine, capital account, Jones, Shepherd, Senda

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Date posted: August 2, 2006  

Suggested Citation

Gans, Mitchell and Blattmachr, Jonathan G., Family Limited Partnership Formation: Dueling Dicta. Capital University Law Review, Forthcoming; Hofstra Univ. Legal Studies Research Paper No. 06-20. Available at SSRN: http://ssrn.com/abstract=921641

Contact Information

Mitchell M. Gans (Contact Author)
Hofstra University - School of Law ( email )
121 Hofstra University
Hempstead, NY 11549
United States
(516) 463-5876 (Phone)

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Jonathan G. Blattmachr
Milbank, Tweed, Hadley & McCloy LLP ( email )
1 Chase Manhattan Plaza
New York, NY 10005
United States
212-530-5066 (Phone)
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