Document Type

Article

Publication Title

Tax Notes (a publication of Tax Analysts)

Publication Date

9-1-2003

Abstract

In Strangi, the Tax Court eliminated all estate tax discounts for a family partnership. It held, as it had in several prior cases, that section 2036(a)(1) required this result. The court then went on to reach the alternative holding that section 2036(a)(2) likewise precluded the estate from claiming a discount. While many have taken steps to address the threat that section 2036(a)(1) poses to these partnerships, few, if any, anticipated the court's alternative holding and the potentially critical threat it poses if sustained. The authors argue that the alternative holding is based on a misreading of the Supreme Court's decision in Byrum and is inconsistent with the Service's own published guidance. They go on to suggest various planning strategies for existing and new partnerships that will neutralize this new threat, concluding that Strangi's alternative holding is not only an imperfect solution for abusive partnership discounts but also nothing more than a trap for the unwary.

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