Estate of Clyde W. Turner v. Commissioner (U.S. Tax Court)

The primary issue for decision was whether the transferred property from Clyde Turner Sr. (decedent) to the Turner & Co. FLP is included in his gross estate. Decedent and wife (Jewell) formed Turner & Co. FLP in April 15, 2002 prior to his death with Clyde Sr. and Jewell each owning 0.5% GP interest and 49.5% limited interest after each contributed $4.33 million of assets to the FLP in 2002. The Court determined that the value of properties transferred to Turner & Co. should be included in the gross estate under section 2036(a) because the transfer of the assets to the FLP did not constitute a bona fide transfer. Clyde Sr. was on both sides of the transaction, created the FLP without any meaningful bargaining or negotiation with Jewell or any of the other anticipated limited partners and furthermore, co-mingled personal and partnership funds when he used partnership funds to make personal gifts. Lastly, the transfer of assets to Turner & Co. did not occur for at least 8 months after the formation of the partnership.