WPC~o vd <9Qx~i)wn;ȒΎ~EC$}2잔PԊP0gMd ~%d#U !z4-Ѿ?:Ц}<[!I) #O$kdGZ b# % 0D 0GU:& 0`U8nT@NUNU Fz*^ w4Efa m 1 1 1" 0cUBbT 0N\ 0U 0 0\=* 0g 0J 0* 0! 0! B" 0" 0C# 0# 0$ 0% 0h& 06' 0( 0( 0) 0@N* 0* 0b+ 03, 0- 0- 0. 0Y/ 00 000 0<1 0D1 0>2 0v@2 0`2 0`3 0`v3 0`3 0`64 084 04 025 05 0:6 0Y7 0_a7 0 7 0j8 04: B*; D/; D+< 0<< D/= 0= 06> 0> 0:? 0^5@ 0<@ 1e@U64AU>jAU*A 1uA 72GBGByBg.FIKKPPU.VVWWZG[[[[[[[u ] ] ]````````````-wcwcwcwcgg`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k`k@>lKONICA MINOLTA 7085/IP-602,,,,0X(#$  0  ($XXXX<6X9`("Courier NewTT(F:2$ !XQtXXX        0  <4 9Z+ Courier New <6X9`("Courier NewTTXXx6X@DQX@<6X9`(CourierTTXXw6X@QX@((A Z6Times New Roman RegularQ 9Z+.Courier New Regular p $XLXXX      1    _=LXXdd="Thetriplenetleaseisaleaseinwhichthetenantis  responsiblefortaxes,insurance,utilities,andmaintenance."  UnitedStatesv._''Stoddard_'',875F.2d1233,1235(6thCir.1989).In \ essence,thethreepropertiesgeneratedasteadystreamofrental 2 incomewithminimaleffortbytheowners.Ɠ2s 6x2y File3|xTABLE A!U( CEMU]emu}AutoList1(a)(a)(a)(a)(a)(a)(a)(a)(CEMU]emu}AutoList2(1)(1)(1)(1)(1)(1)(1)(1)(CEMU]emu}AutoList3(1)(1)(1)(1)(1)(1)(1)(1)(;3$2#  0  .3  0  <6X9`(*Courier 12pt10cpi- -(O$*+ (_2623  ..*G+M (_25   /%` ` hp x /23  ..  5+ ` hp x 5  *D+M (_24   ," hp x ,23  ..  5+ ` hp x 5   R $XLXXX      2    _=LXXdd=Theoldestson,NicholasA.Abraham,wasnotonthepetition.  Apparently,he"optedout"ofthelitigation"earlyon"anddecided  toforgoanyinterestinhismother'sestate.Intherestofthis \ discussion,theterm"children"isassumedtorefertothethree 2 remainingsiblings:Richard,Donna,andDiana. 3 $XLXXX      3    _=LXXdd=Someofthepropertiesweredeededtorealestatetrustswith  therespective_%%FLPs_%%Ԁmade100%beneficiaries.Forourpurposes,   thesedetailsarenotrelevantandthepartiesstipulatedthatthe  propertieswere"placedin"the_%%FLPs_%%.*A+M (_23  ` ) hp x )23  ..  5+ ` hp x 5  *>+M (_22   &hhp x &23  ..  5+ ` hp x 5  *;+M (_21   #p x #23  ..  5+ ` hp x 5  *8+M (_20  h  p x 23  ..  5+ ` hp x 5  *5+M (_19   pp x 23  ..  5+ ` hp x 5   d*2+M (_18    x 23  ..  5+ ` hp x 5  * (_1723  Ԁ*GM (_16   /%` ` hp x /23  Ԁ  5+ ` hp x 5  *DM (_15   ," hp x ,23  Ԁ  5+ ` hp x 5  *AM (_14  ` ) hp x )23  Ԁ  5+ ` hp x 5  *>M (_13   &hhp x &23  Ԁ  5+ ` hp x 5  *;M (_12   #p x #23  Ԁ  5+ ` hp x 5  *8M (_11  h  p x 23  Ԁ  5+ ` hp x 5  *5M (_10   pp x 23  Ԁ  5+ ` hp x 5  (2M &_9    x 23  Ԁ  5+ ` hp x 5  ( &_823  (GM &_7   /%` ` hp x /23   5+ ` hp x 5  (DM &_6   ," hp x ,23   5+ ` hp x 5  (AM &_5  ` ) hp x )23   5+ ` hp x 5  (>M &_4   &hhp x &23   5+ ` hp x 5  (;M &_3   #p x #23   5+ ` hp x 5  (8M &_2  h  p x 23   5+ ` hp x 5  (5M &_1   pp x 23   5+ ` hp x 5  &2M $_    x 23   5+ ` hp x 5  0.Normal<:Definition T<AA:Definition L , 5+ ` hp x 5  5+ ` hp x 586Definition(''&H1      (&H2  (&H3  (&H4 XXX (&H5  (&H6  20Address8MM6Blockquote , , 5+ ` hp x 5   5+ ` hp x 5,*CITE,dl*CODEK[<6X9`(Courier NewKS\\  `&Times New RomanS42Emphasis64Hyperlink    <:FollowedHype    4go2Keyboard K[<6X9`(Courier NewKS\\  `&Times New RomanS <:Preformatted/%  ,Kk %#/K[<6X9`(Courier NewKS\\  `&Times New RomanS/%  ,Kk %#/<:zBottom of 7P(X7  ?]%2A`Arial?  S\\  `&Times New RomanS7Q(X7&  d dO)1dxd'dxd<:zTop of For7S(X7  ?]%2A`Arial?  S\\  `&Times New RomanS7Q(X7O)2dxd0KS.SampleK[<6X9`(Courier NewKS\\  `&Times New RomanS0.Strong 8dl6TypewriterK[<6X9`(Courier NewKS\\  `&Times New RomanS42Variable: 8HTML MarkupB      2 0CommentB  )*+,-./0 35;AGMSY_11.1.1.1.1.1.1.1.<6X9`(Courier New\  `&Times New Roman%2A`Arial3#37=CIQYag1.a.i.(1)(a)(i)1)a)^i)  $XLXXX      4    _=LXXdd=AccordingtoaletterdatedNovember9,1995,fromWilliam  _''Kirchick_'', XLXXXLanestateplanninglawyerchosentocreateMrs.Abraham's  estateplan#XLXX XLF#,DonnaandDianaweredeemedtohavemadea$9,091 \ capitalcontributiontotherespective_''FLPs_''.Thisamountwas 2 apparentlycomputedbytreating$900,000,the_''FLP_'''sinterestinthe X underlying_''Tygnsboro_''Ԁproperty,as99%ofthefinalvalueofthe . _''FLP_''. ] $XLXXX      6    _=LXXdd=Applyingthevaluationthepartiesreliedonin_Kirchick_'s  letter($5,795per1%interest),itappearsthatDianawascredited  withhavingpaid$161,000($5,795x27.783=$161,002.48)while \ Donnawascreditedwithhavingpaid$151,000($5,795x26.057= 2 $151,000.31).Apparentlythisdiscrepancywasdeliberately X introducedinordertoensurethatthetwofamilieswouldendup . withroughlyequalownershipinthe_FLPs_Ԁaftergiftinterestswere   added.  $XLXXX      7    _=LXXdd=Thesepercentageswerecomputed(basedonthediscounted  valueforeach1%interestsetoutin_''Kirchick_'''sletter)tocome  withintheannualfederalgifttaxexclusion.See26U.S.C. \ 2503(b).  $XLXXX      10    _=LXXdd=TheNoticeofDeficiencyonlysoughttoinclude70%ofthe  valueoftheassetsofthe_''RMA_''Ԁ_''FLP_''Ԁinthegrossestate,crediting  theEstateforRichard'ssettlementofhisclaimsagainstthe \ Estatefora30%stakeinthe_''FLP_''.AlthoughtheCommissioner's 2 positionisthatthisdeterminationwaserroneousand100%ofthe X valueoftheassetsinthe_''RMA_''Ԁ_''FLP_''Ԁshouldhavebeenincluded,the . Commissionerdidnotseektoincreasethedeficiencyamountinthe   TaxCourtanddoesnotdosobeforethiscourt.SeeEstateof   Abrahamv._''Comm'r_'',87_''T.C.M._''Ԁ(_''CCH_'')975,982n.29(2004).  $XLXXX      15    _=LXXdd=Tobesure,therewasalsosomecontradictoryevidence.For  example,atonepointGoldmanexplainedthathedidnotthinkhe  coulddenytheotherlimitedpartners(DonnaandDiana'sfamilies) \ theirmonthlyincomefromthe_''FLPs_''Ԁ(althoughhethenamendedhis 2 testimony).Italsoappearsfromafewaccountingstatementsdone X byDonnaearlyonthattheexpensesforMrs.Abraham'ssupportwere . notformallytreatedasanobligationofthe_''FLPs_''Ԁ(butthese   statementsweresubsequentlycorrectedforoverpaymentstoDonna   andDiana,andtherearenodetailedaccountingstatementsforthe `  partnershipsintherecordafterthefirstfewmonths).Inany 6   casethedecreeonlycalledforsufficientfundsforMrs.Abraham's  \  supporttobereservedinthe_''FLPs_'',whichdoesnotrequirethe  2  guardianadlitemtotreatMrs.Abraham'ssupportasapartnership   expense.TheTaxCourt,asfactfinder,resolvedthesepotential   contradictionsinfavoroftheoverwhelmingevidencethattherewas d  suchanunderstandingamongtheparties,andthatfindingisnot :  clearlyerroneous.<6X9`(Courier  $XLXXX      12    _=LXXdd=TheTaxCourtdecisionfocusedontheapplicabilityof2036  tothetransfersof_''FLP_''ԀintereststoMrs.Abraham'schildren.On  appeal,theCommissionercontendsthatweshouldfocusouranalysis \ ontheapplicabilityof2036totheinitialtransfersofthereal 2 estatetothe_''FLPs_''ԀandaffirmtheTaxCourtonthisdifferent X basis.WedeclinetheCommissioner'sinvitation.  $XLXXX      16    _=LXXdd="Thevalueofthegrossestateshallincludethevalueofall  propertytotheextentoftheinterestthereinofthedecedentat  thetimeofhisdeath."26U.S.C.2033. = $XLXXX      11    _=LXXdd=TheEstatemakesnoargumentthatburdenshiftingis  appropriateunder26U.S.C.7491. k $XLXXX      13    _=LXXdd=TheEstateandtheCommissionerdisagreeoverwhetherwe  shouldanalyzethe"retainedinterest"branchorthe"bonafide  sale"branchfirst.Itmakesnodifferenceinwhichorderthe \ analysisisdone.Thetwobranchesarenotcompletelyoverlapping. 2 Thegratuitousgiftsof_''FLP_''Ԁpercentageinterestswerenot"sales," X bonafideorotherwise,andwouldonlyescapeinclusionunder . 2036ifMrs.Abrahamretainednointerestinthosetransferred   _''FLP_''Ԁinterests.  $XLXXX      14    _=LXXdd=Inadditiontothefactthattheletterswereinadmissible  hearsay,theycontainedinadequateexplanationforthevaluation  computation.TherewasnoexplanationforwhyDonnaandDianawere \ deemedtohavemade1%capitalcontributions;therewasno 2 explanationforhowtheminorityandlackofmarketability X discountswerecomputed;andtheletterscontainedextensive . disclaimersastothereliabilityofthevaluation. # $XLXXX      9    _ XLXXXL=LXXdd=_Lipof_ԀvaluedtheSmithand_Walpole_Ԁpropertiestogetherat  $830,000andthe_Tyngsboro_Ԁpropertyat$2,200,000atthetimeof  Mrs.Abraham'sdeath.Treatingthevalueoftheunderlying \  propertyasthevalueofthe_FLP_Ԁholdingtheproperty,_Lipof_Ԁthen  computedthemarketvalueofMrs.Abraham'spercentageinterestsin  therespective_FLPs_._Lipof_Ԁapplieda3040%discounttothevalue \ ofthepartnershipinterestsforlackofmarketability.#XLXX XL#  $XLXXX      8    _ XLXXXL=LXXdd=Mrs.Abrahaminitiallyhelda99%limitedpartnership  interestinthe_''RMA_''Ԁ_''FLP_''.OnDecember26,1995,throughher   guardianadlitem,Mrs.Abrahamtransferreda30%limited  partnershipinterestinthe_''RMA_''Ԁ_''FLP_''ԀtoRichardinexchangeforhis  settlingoftheclaimsagainstherestate.This30%interestin \ the_''RMA_''Ԁ_''FLP_''Ԁisnotatissueinthisappeal.Seeinfranote10.#XLXX XL# codefendantspresentence PSR recodification$mischaracterizescodefendant Jumaresentencing 6 $XLXXX      5    _ XLXXXL=LXXdd=Wedonotdelveintothedetailsaboutthetransferofthe  Smith/_''Walpole_''Ԁpropertiestothe_''RMA_''Ԁ_''FLP_''Ԁbecausetheyarenotas  relevanttothesubjectofthisappealduetothefactthatRichard \ didnotpurchaseany_''FLP_''Ԁinterests.Inbroadterms,theevents 2 weresimilartotheeventssurroundingtheDAC/DAS_''FLPs_''.#XLXX XL# !XLXXX  _(TRY,3'X3' Letter 3' Letter3'T ? * ! XXXXL eX X     8LXXdd8UnitedStatesCourtofAppeals W e  FortheFirstCircuit  H W XLX H  A') ` dE< ` A      `     h No.0  041886K (#(#   ESTATEOFIDAABRAHAM,Deceased;  G  DONNAM.CAWLEYandDIANAA.SLATER,Administratrixes,    @LLPetitioners,Appellants, y     `     h      p   @tt)v. %u    COMMISSIONEROFINTERNALREVENUE, ! j@ Respondent,Appellee. } A') ` dE<(` A )y @APPEALFROMADECISIONRӈ ^   OFTHEUNITEDSTATESTAXCOURT 4 A') ` dE<` A  @@'Before u @@((Torruella,Lynch,andHoward,CircuitJudges. !q A') ` dE<` A        BrendanJ.Sheaforappellants. !   MichaelJ.Haungs,TaxDivision,DepartmentofJustice,with " whomEileenJ.O'Connor,AssistantAttorneyGeneral,andJonathan ^ # S.Cohen,TaxDivision,DepartmentofJustice,wereonbrief,for 4!$ appellee.  "Z%   *'ddd Xdd Xdd X(#(#,( dd ,( dd ,( dd +  #'# < SI$j( @38496@SMay25,2005 $@ *  RHC%!+" @38496 @ R($j,  (* !  *,X` XX*=LXXdd=  &",? 8LXXdXXd8=LXXdXXd= ` LYNCH,CircuitJudge .ThisisanappealfromaTaxCourt  determinationunfavorabletotheestateofIdaAbraham(the x Estate),broughtbyhertwodaughtersasadministratrixes. $t Applying26U.S.C.2036(a),theTaxCourtconcludedthatthe   Estatehadunderreportedthetaxesduebecausethedecedenthadan |  interestincertainpropertypurportedlytransferredtoher ( x  childrenbygiftandpurchase,thatthepurchaseofthedecedent's $  interestsbythechildrenwerenotbonafidesalesforadequateand   fullconsideration,andthatthedecedentretainedrightsinthe ,|  incomefromthetotalproperty.XLXX XLEstateofAbrahamv.Comm'r,87 ( T.C.M.(CCH)975,97982(2004).Asaresult,thecourtrejected  theEstate'schallengetotheIRSdeterminationofatax 0 deficiency,which,after# XLXXXLD#adecreaseforstatetaxcreditsnot , relevanthere,cametoXLXX XL$939,195.00# XLXXXL#.   ` WeaffirmtheTaxCourt.Weconsiderboththe 4 specificityrequiredinanoticeofdeficiencyandthevarious 0 requirementsof26U.S.C.2036(a).    ` IdaAbrahamsufferedfromAlzheimer'sdiseaseandhadto 8!" beplacedunderguardianship.In1995,aMassachusettsprobate "4$ courtenteredastipulateddecreerequiringtheestablishmentofan $& estateplanforMrs.Abraham.Thatactionwastakeninorderto <&!( ensurethatMrs.Abraham'sfinancialneedswouldbemetandto '8#* preventherestatefrombeingdrainedbythecontentiouslitigation )$, amongherchildren.Mrs.AbrahamdiedonJune9,1997. @+&.  ` Aspartoftheestateplan,threepiecesofcommercial  property,whichwereownedbyMrs.Abrahamandwhichgenerated \ steadyrentalincome,weretransferredtothreefamilylimited X partnerships(FLPs).Mrs.Abrahamandherchildrenwerepartners   inthoseFLPs.Between1995,whentheFLPsweresetup,and1997, `  whenMrs.Abrahamdied,she,throughherguardianadlitem,  \  transferredpercentageinterestsofhershareinthepartnerships   toherchildrenandtheirfamilies.Uponherdeath,theEstate d  includedinherestatetaxreturnonlythepercentageinterestsin `  theFLPsstillheldbyheratherdeathandvaluedtheseinterests   byapplyingminorityandlackofmarketabilitydiscounts.As h explained,theIRSassessedadeficiencybasedon26U.S.C.2036, d andtheTaxCourtrejectedtheEstate'schallenge.    I.  l EstablishmentoftheEstatePlan 4  ` IdaAbrahamandherhusband,NicholasAbraham,hadfour 0 children:NicholasA.Abraham,RichardAbraham,DonnaCawley,and   DianaSlater.Nicholas,Sr.,diedonJune5,1991,andlitigation 8!" amongstthechildrenoverhisestatefollowed. "4$  ` AmongtheassetsMrs.Abrahamreceivedfromherhusband $& werethreepiecesofcommercialrealestatelocatedinTyngsboro <&!( andWalpole,Massachusetts,andinSmithfield,RhodeIsland.The '8#* Walpolepropertywasleasedtoalumberyard,andtheother )$, propertieswereskatingrinksleasedtothirdparties.Theleases @+&. onallofthesepropertieswerelongterm,triplenetleasesto  thirdpartiesunrelatedtotheAbrahamfamily.  #  1       \  ` Atsomepointduringthisperiod,Mrs.Abrahamdeveloped X Alzheimer'sdisease.AMassachusettsprobatecourtplacedher   underguardianshiponMarch10,1993.Theprobatecourtappointed `  herdaughter,Donna,asapermanentguardianofMrs.Abraham's  \  estateandproperty.Litigationanddiscordamongthechildren,   mainlybetweenRichardandthetwosisters,continued.Thefeud d  wasapparentlyoverwhatamountwasneededforMrs.Abraham's `  protection.ThelitigationwasalsodrainingMrs.Abraham's   assets.Inordertoendthis,onAugust1,1995,Mrs.Abraham's h children,  #  2      ׀theirrespectivecounsel,andMrs.Abraham'slegal d guardianssignedastipulatedcourtdecreetoestablishanestate  planforMrs.Abrahampursuanttoanagreement.Thedecreeset l forththeexpectationfortheestateplanandforthe h responsibilitiesoftheparties.Therewasaseparateestateplan.  TheTaxCourtlaterconsideredevidenceaboutthedecreeonthe p  issueoftheunderstandingoftheparties. !l"  ` Thedecreeprovidedfortheplacingofthethreepieces  ofincomeproducingcommercialrealestateinFLPsandthen \ apportioningoutpercentageinterestsintheFLPstothechildren X inordertoreducetheEstate'staxliabilityuponMrs.Abraham's   death.ButthefamilyalsounderstoodthattheFLPswereameans `  toprotectMrs.Abrahamfinancially.AsDonnatestifiedattrial:  \  ` ` [T]hepartnershipsassured...that[Mrs.   Abraham]wouldbegXLXX XLconstantlyprotected.She   wouldneverwantforanything.Therewould d  alwaysbemoneythere.Andiftherewasn't :  moneyinherpartnershipfund,ithadtocome `  outofmypartnershipsharesormybrother's, 6 buttheprotectionwasthereforherasa   guaranteethatshewouldlivestatusquo.  # XLXXgXL%#Ԁ h ` %` w%% ` ThedecreeprovidedthatattorneyDavidGoldmanwouldbe > namedasalimitedguardianadlitemwithrespecttoMrs.Abraham's : interestsintheFLPsandwould:  ` ` havetherighttomeetwiththeguardiansof B thepersonandtheestateofIdaAbrahamin h ordertoascertainherneedstodetermineany > andallshortfallasbetweenthefunds  generatedbyIdaAbraham'ssegregatedproperty  andtheincomerequired[for]herfromeachof p  theseparatelimitedpartnerships. F ! ` ,)` ):) ` ForeachFLP,Mrs.Abrahamwouldbemadeageneraland !B# limitedpartner,whilethethreechildren,Richard,Donna,and #% Diana,wouldalsoreceivelimitedpartnershipinterestsintheir J% ' respectiveFLPs.Thedecreeprovidedthateachchild,asalimited &F") partner,would: (#+ ` ` receiveincomefromsaidfamilylimited N*%- partnership...eitherasthemanagementfee $+t&. and/orgiftsfromIdaAbrahamafterdeducting +J'/ fromthegrossincomeofthepartnershipall  fees,taxes,partnershipadministration  expenses,reserveforexpensesandmonies \ neededinthediscretionofthelimited 2 GuardianadlitemforIdaAbraham'ssupport. X ` ,` ,,(emphasisadded).Underthedecree,althoughthelaterFLP   agreementsaresilentonthepoint,supportforMrs.Abrahamcame `  fromtheincomeoftheoverallpartnerships.Thethree  \  partnershipsunderthedecree"shareequally...thesupportof   IdaAbrahaminsofarasthefundsgeneratedbyIdaAbraham's d  propertiesmaintainedbyherdonotprovidesufficientfundsfor `  heradequatehealth,safety,welfareandcomfortasdeterminedby   thelimitedGuardianadlitem...." h  ` Thereweretwomechanismsbywhichthechildrenwould d increasetheirownershipshareintheFLPs,thusostensibly  reducingMrs.Abraham'sestate:bygiftorbypurchase.Thedecree l providedthatannualgiftsconsistingoflimitedpartnership h interestsinthethreeFLPswouldbemade"inamountsnottoexceed  thethenavailableannualgifttaxexclusionforfederalgifttax p  purposes"tothethreechildrenandtheirfamilies.Thethree !l" childrenwouldalsohavetherighttopurchasefromMrs.Abraham "$ additionallimitedpartnershipinterestsintheirrespectiveFLPs, t$& withtheproceedsfromthesales"heldinarevocabletrustforthe  &p!( benefitofIdaAbrahamduringherlifetimeand...utilizedfor '#*  herneeds(onlyifherotherassetsareinsufficienttodoso)and x)$, thenheldforsuchchildandhisorherfamilyuponthedeathof  IdaAbraham." \   ` Finally,thedecreeprovidedthat: X ` ` IdaAbraham'slivingarrangementsshallremain   inaccordancewiththepresentarrangementand   everyeffortwillbemadetomaintainherin `  "statusquo."Hersegregatedassetsshallbe 6   maintainedatalevelestablishedbythe  \  limitedGuardianadliteminhissole  2  discretion.   ` 6` 66Thedecreethusgavetheguardianadlitempowernottomakegifts d  fromMrs.Abraham'sshareifthatwouldcontravenemaintainingthe `  statusquoastoMrs.Abraham'slivingconditions.   CreationoftheFLPsandtheTransfersoftheUnderlyingReal h Estate > 9 ` Theestateplanthatwasestablishedessentiallyfollowed : theplanagreedtobythepartiesinthedecree,thoughtherewere  somedifferencesinthedetails.Weomitdiscussionofdetailsnot B pertinenttotheappealhere. >  ` InOctober1995,threeseparateFLPs,oneforeachofthe  threechildrenembroiledinthelitigation,werecreated:(1)The F ! RMASmithfield/WalpoleFamilyLimitedPartnershipforRichard(RMA !B# FLP),(2)TheDASTyngsboroFamilyLimitedPartnershipforDiana #% (DASFLP),and(3)TheDACTyngsboroFamilyLimitedPartnershipfor J% ' Donna(DACFLP).Thecommercialrealestatepropertieswereplaced &F") intheFLPs.! #  3      ׀InsteadofhavingMrs.Abrahamasthegeneral (#+ partner,eachFLPhad,asitsrespectivegeneralpartner,a  separatemanagementcompanyformedforthispurpose.Each \ managementcompany,ascorporategeneralpartner,hadonlya1% X interestintherespectiveFLPs,buteachalsohad"theexclusive   righttomanagethebusinessofthePartnership,"includingthe `  authorization"todisposeofallorsubstantiallyalloftheassets  \  ofthePartnershipwithouttheconsentoftheLimitedPartners."   AttorneyGoldmanwasthesolecorporateofficerofthegeneral d  partnermanagementcompaniesfortheDACandDASFLPs.Because `  RichardrefusedtoindemnifyGoldman,HaroldRubin,Richard's   accountant,wasputinchargeofthegeneralpartnermanagement h companyoftheRMAFLP.RubinwasalsonamedMrs.Abraham's d guardianadlitemwithrespecttoRichard'sinterestsinthe  partnership,buthadtodefertoGoldmanasMrs.Abraham'sguardian l adlitem,andRubinhad"nocontrolwhatsoeverover[Mrs. h Abraham]."   ` Thepartnershipagreementsdidnotspecificallymention p  anyobligationforMrs.Abraham'ssupportasspecifiedinthe !l" decree.Theagreementsprovidedthatifcashwereavailablefor "$ distributiontothepartners,thecashshouldfirstbeusedto t$& discharge"debtsandobligationsofthePartnershipandmanagement  &p!( fees,"thento"fundreservesforworkingcapital,improvementsor '#* replacementsorcontingencies,totheextentdeemedreasonableby  theGeneralPartner,"andfinally"tothePartnersinproportionto \ theirrespectivePercentageInterests." X  ` TheOctober1995transfersoftheunderlyingrealestate   totheFLPsarereferredtobythepartiesas"thefirstsetof `  transfers."Thepartiesstipulatethatatthetimeofthetransfer  \  oftheTyngsboropropertytotheDAC/DASFLPs,theproperty'svalue   was$1,800,000,withtheundividedonehalfinterestineachFLP d  valuedat$900,000.Mrs.Abrahaminitiallyhelda98%limited `  partnershipinterestineachoftheDACandDASFLPs.Donnaand   Dianaeachhelda1%limitedpartnershipinterestintherespective h FLPs.ItdoesnotappearfromtherecordthatDonnaorDianapaid d fortheir1%interests,butintheendthatisimmaterial.a #  4         ` Inordertoestablishthevalueofthepercentage l interestsinthepartnerships(asofthetimetheFLPswereset h up),thechildrensubmittedtotheTaxCourtthevaluationsetout  inaNovember9,1995letterfromattorneyWilliamKirchick,an p  estateplanninglawyerchosentodraftMrs.Abraham'sestateplan. !l" Inthatletter,Kirchickexplainedthateach1%interestinthe "$ DAC/DASFLPswasvaluedat$9,091,butthathehadapplieda15% t$& discountforminorityinterestanda25%discountforlackof  marketabilitytoarriveatthemarketvalueof$5,795foreach1% \ interest.Attrial,attorneyKirchickwasnotqualifiedasan X expertanddidnottestify,andtherewasnoexplanationinthe   letterforhowhearrivedatthesediscountpercentages.Atthe `  endoftheletter,attorneyKirchickaddedthefollowing  \  disclaimer:   ` ` Youshouldknowthatnorepresentationismade d  thatthesediscountswillholduporthatyou :  willbeentitledtothefullamountofthe `  annualexclusionsclaimedforthegiftsmade. 6 Eachpartnershipandtheassetsthereofmust   bejudgedontheirownmerits,anditisnot  possibletoascertainwithanydegreeof h certaintywhatwillpassmusterwiththe > InternalRevenueService. d ` N` N NThatwarningprovedtobeprophetic. #  5         ` Attrial,theCommissionerobjectedtotheintroduction l ofthisvaluationletterintoevidence.TheTaxCourtadmittedthe h letterforthelimitedpurposeofshowingthatthechildrenrelied  onthegivenvaluation.Butthecourtdidnotconsideritas p  evidencethatthediscountswereappropriate. !l"   &p!( "Purchase"ofPartnershipInterestsbytheChildren   ` ThetransfersofinterestsintheFLPssubsequentto \ theirformationarereferredtobythepartiesas"thesecondset X oftransfers."    ` InOctoberof1995,DianaandDonnaeachwrotea$160,000 `  checktoMrs.Abraham,andinexchange,Mrs.Abraham,throughher  \  guardianadlitem,transferreda27.783%limitedpartnership   interestintheDASFLPtoDiana,anda26.057%limitedpartnership d  interestintheDACFLPtoDonna.b #  6       `   ` AttorneyGoldmanonlycreatedonecheckingaccountfor   eachFLP,andinthesamegeneralaccounthedepositedtheincome h fromthemonthlyrentgeneratedbytheunderlyingrealestateand d themoneypaidtoMrs.Abrahamtopurchaselimitedpartnership  interests.NoeffortwasmadetosegregateincomepaidtoMrs. l Abrahamforthetransferofhersharesfromtheincomefromher h ownershipinterest.Thiswasnotincompliancewiththecourt  decree,whichspecifiedthatthefundspaidtoMrs.Abrahamto p  purchaseherlimitedpartnershipinterestswouldbeheldina !l" revocabletrustforherbenefit. "$  ` OnMarch25,1996,Donnawroteouta$30,000checkmade  payabletotheDACFLP,butnottoMrs.Abraham,drawnonan \ accountinbothDonnaandDiana'snames.Inexchange,Donna X receiveda5.178%limitedpartnershipinterestintheDACFLPfrom   Goldman(whoheldthesharesforMrs.Abraham).Onthesameday, `  Donnaalsowroteouta$40,000checkmadepayabletotheDASFLP  \  drawnonthesamecheckingaccountthatsheandDianashared.In   exchange,Dianareceiveda6.904%limitedpartnershipinterestin d  theDASFLPfromGoldman. `   ` InMarch1997,DonnaandDianaeachpurchasedan   additional8.63%interestintheirrespectiveFLPsbypaying h $50,000totheFLPs. d GiftstotheChildren   ` Also,between1995and1997,Goldman,asMrs.Abraham's l guardianadlitem,madetotalgiftsof22.438%interestsintheDAS h FLPtoDianaandherfamily.Duringthesametime,Goldmanmade  totalgiftsof25.89%interestsintheDACFLPtoDonnaandher p  family.c #  7      ׀Between1995and1997,GoldmanmadegiftsfromMrs. !l" Abraham'sshareof23.439%interestsintheRMAFLPtoRichardand "$ hisfamily. #  8       t$& OperationoftheFLPs   ` EachmonthbetweenthecreationoftheFLPsandMrs. \ Abraham'sdeath,Donna,asguardianofMrs.Abraham'sperson,would X sendletterstoGoldmansettingoutthemonthly"shortfall"in   paymentforMrs.Abraham'sexpensesanddemandingthatthethree `  FLPsmakeuptheshortfalls.Theshortfallrepresentstheextent  \  towhichMrs.Abraham'spersonalincomefromsourcessuchasSocial   Securityandanannuitycouldnotcoverherexpenses.Goldman d  occasionallysoughtdocumentationofcertainexpenses,but `  ultimatelyalwaysfoundDonna'saccountinginorder.Goldmanwould   thendividetheshortfallamountinthree,andcausecheckstobe h writtentoDonnafromtheaccountsofthethreeFLPstopaythe d shortfall.   ` Eachmonth,GoldmanalsopaidouttoDonna,Diana,and l Richardtheirpercentageownershipshare(whichalsoincludedthe h sharesgiftedtotheirfamilies)oftheincomefromtheFLPs.  AccordingtosomeearlyaccountingrecordsoftheFLPs,thenet p  incomeofthepartnershipswascomputedbydeductingfromthegross !l" incomeofthepartnershipsexpensessuchasadministrationfeesand "$ insurance.Atleastintheseearlyaccountingrecords,the t$& paymentsfromthepartnershipstomakeuptheshortfallinMrs.  &p!( Abraham'sexpenseswerenottreatedformallyonthebooksas  partnershipexpenses.TherewerenoFLPaccountingrecordsfrom \ laterintherecord. X  ` Donnatestifiedattrialthatitwasherunderstanding   thatallofthepartnershipincomefromtheFLPswouldbeavailable `  topayMrs.Abraham'sexpensesregardlessofthechildren's  \  ownershipinterests,andthatGoldmanwasobligedtousethe   overallpartnershipfundstomakeuptheshortfall.Goldman d  testifiedattrialthatheactedasafiduciaryforMrs.Abraham, `  andunderstoodhis"firstresponsibility,assetoutinthe   documents,andas[he]discussedwitheveryone,[tobe]to... h usefundsnecessarytomaintain[Mrs.Abraham]asis."Goldman d testifiedthathesawhisdutiesandauthorityasguardianadlitem  tooriginateinthecourtdecree,andspecificallyinthesections l ofthedecreewhichprovidedthatpartnershipfundshadtobe h reservedforMrs.Abraham'sneedsandthatMrs.Abraham'sliving  arrangementsweretobemaintainedin"statusquo."Althoughhe p  acknowledgedthathehadvariousotherfiduciarydutiesinsofar !l" ashealsomanagedthegeneralpartnermanagementcompaniesforthe "$ FLPs,hisviewwasthat"thereason[he]wasappointedwastowork t$& on[Mrs.Abraham's]behalf,period."  &p!(  ` GoldmanalsotestifiedthatheneverpaideitherDonnaor '#* Dianamorethantheirshareofthepartnershipfunds,andthat x)$, duringthewholetimeheactedasherguardianadlitem,hepaid $+t&. Mrs.Abraham'smonthlyshortfallsoutoftheshareofFLPincome  attributabletoMrs.Abraham.Headmitted,though,thatifMrs. \ Abraham'sneedshadincreasedbeyondtheincomegeneratedbythe X shareattributabletoher,hewouldhaveputMrs.Abraham"inthe   toppriority"andused"anymoneythatwasat[his]disposaltouse `  toaccountforher."HealsoexplainedthatifoneoftheFLPs  \  lostitssourceofincome,hewouldhaveusedhisdiscretionary   powertomakeuptheshortfallfromfundsintheotherFLPs. d  Althoughhedidtestifyatonepointthathedidnotthinkhecould `  outrightrefusetopaytoDianaandDonnatheincomeattributable   totheFLPintereststheyhadpurchased,heimmediatelyamendedhis h testimonytoexplainthatitwashisandthefamily'sunderstanding d thatallFLPfundscouldbeusedtofulfillMrs.Abraham'sneeds  andhadheusedthefundsinthisway,he"wouldhavebeendoing. l ..whatthefamilywouldhavewanted." h EventsFollowingMrs.Abraham'sDeath   ` OnJune9,1997,Mrs.Abrahamdied.Basedonthe p  calculationsinaletterfromMichaelLipof,arealestate !l" consultant,theEstatereportedinitsEstate(andGeneration "$ SkippingTransfer)TaxReturnthatthefairmarketvalueofMrs. t$& Abraham's45%interestintheRMAFLPwas$242,750andthevalueof  &p!( her33.3%interestintheDAC/DASFLPswasacombined$476,666. #  9       '#*  ` DuringthethreemonthsafterMrs.Abraham'sdeath,  attorneyGoldmandisbursed$120,869.42toDianafromtheDASFLP \ and$93,078.62toDonnafromtheDACFLP.Theseamountswerenot X reportedontheEstate'staxreturn.TheCommissionerdoesnot   seektoincludetheseamountsinthegrossestate.gXLXX XL `     II. # XLXXgXLv#  \  w ` TheInternalRevenueServiceauditedtheEstate'stax $  returnanddeterminedadeficiencyof$1,125,210plusinterest.   TheNoticeofDeficiencywasissuedonFebruary28,2001.Inthe ,|  Notice,foreachFLP,thevalueofeachFLPasreportedbythe ( Estatewassetaside,andtheunderlyingvalueofthecommercial  realestateheldbytheFLPwasincludedaspartofthegross 0 estate.d #  10      ׀TheNoticegavethefollowingexplanationforeachFLP: , ` ` Itisdeterminedthatthedecedent/guardian  transferred[nameofFLP]forlessthan ^ adequateandfullconsiderationinmoneyor 4 money'sworthandthatthedecedent,through  Z theguardian,retainedaninterestinthe 0 asset.Therefore,pursuanttoI.R.C.,section  2036,thefairmarketvalueoftheassetis  includableinthedecedent'sgrossestate.  Accordingly,thetaxableestateisincreased \ by[fairmarketvalueoftheunderlyingreal 2 estate]. X ` %z` z3z ` Theprovisionofthecodepursuanttowhichthe   Commissionerdeterminedadeficiencyprovided,inrelevantpart: `  ` `  (a)Generalrule. --Thevalueofthegross  \  estateshallincludethevalueofallproperty  @  totheextentofanyinterestthereinofwhich   thedecedenthasatanytimemadeatransfer   (exceptincaseofabonafidesaleforan r  adequateandfullconsiderationinmoneyor H  money'sworth),bytrustorotherwise,under n  whichhehasretainedforhislifeorforany D periodnotascertainablewithoutreferenceto  hisdeathorforanyperiodwhichdoesnotin  factendbeforehisdeath-- v  (1) thepossessionorenjoymentof,orthe "r righttotheincomefrom,theproperty,or V  (2) theright,eitheraloneorinconjunction  withanyperson,todesignatethepersonswho  shallpossessorenjoythepropertyorthe l incometherefrom. B ` }` }}26U.S.C.2036(a). >  ` TheEstatepetitionedtheTaxCourtforaredetermination   ofthedeficiency.TrialintheTaxCourtwasheldonOctober16, F!" 2002.TheTaxCourtissuedamemorandumdecisiononFebruary18, "B$ 2004.SeeEstateofAbrahamv.Comm'r,87T.C.M.(CCH)975(2004). $&  ` TheTaxCourtfirstdeterminedthattheburdenofproof J&!( wasontheEstate,rejectingtheEstate'sargumentthattheNotice 'F#* ofDeficiencyfailedtogiveadequatedescriptionofthefactual )$, andlegalbasesforthedeficiencydetermination.Id.at979. N+&.  ` TheTaxCourtfoundthatitwastheunderstandingofthe  childrenandthelegalrepresentativesthatMrs.Abraham"was \ entitledtoanyandallfundsgeneratedfromthepartnershipsfor X hersupportfirst.Onlyafterthiscouldanyexcessbedistributed   inproportionofthepartners[']supposedownershipinterests. `  Here,itisclearthatatthetimeofthetransfers,decedent  \  explicitlyretainedtherighttotheincomethattheFLPsgenerated   totheextentnecessarytomeetherneeds."Id.at981(emphasis d  inoriginal). `   ` TheTaxCourtfurtherfoundthattheinitialsalesby   Mrs.AbrahamofFLPintereststoDonnaandDianafor$160,000each h didnotconstitute"bonafidesale[s]foradequateconsideration" d withinthemeaningof26U.S.C.2036(a)becausetheEstatedid  notproducesufficientevidencetodemonstratethefairmarket l valueforthepartnershipinterestsonthedatesofthetransfers. h Id.at982.Inaddition,inthecaseofthesubsequentpurchases,  themoneywaspaidtotheFLPs,nottoMrs.Abraham,andthus,the p  courtfound,couldnotqualifyasbonafidesales.Id. !l" Accordingly,theTaxCourtupheldthedeficiencydetermination. "$ XLXX XLThefinaldeterminationofthedeficiency,aftercreditsforstate t$& estate,inheritance,legacyorsuccessiontaxes,was$939,195.00.# XLXXXL#  &p!(  ` TheEstatetimelyappealedtothiscourt. '#*  $+t&.   III.     TheBurdenofProof x  ` TheEstatefirstarguesthattheTaxCourterredby $t placingtheburdenofproofontheEstateinsteadofonthe   Commissioner.Wereviewtheallocationoftheburdenofproof,a |  questionoflaw,denovo.SeeTrullv.VolkswagenofAm.,Inc., ( x  187F.3d88,93(1stCir.1999). $   ` Generally,thetaxpayerbearstheburdentorefutebya   preponderanceoftheevidencetheCommissioner'sdeterminationof ,|  deficiency,whichispresumedtobecorrect.SeeWelchv. ( Helvering,290U.S.111,115(1933);Delaneyv.Comm'r,99F.3d20,  23(1stCir.1996);T.C.R.142(a)(1).ButwheretheNoticeof 0 Deficiencyfailstoadequately"describethebasisonwhichthe , Commissionerreliestosupportadeficiencydetermination"andthe  Commissionerseekstoestablishthedeficiencyonabasisnot 4 describedintheNotice,theburdenshiftstotheCommissioneron 0 thatnewbasis.Sheav.Comm'rofInternalRevenue,112T.C.183,   197(1999);seeT.C.R.142(a)(1)."Anewtheorythatispresented 8!" tosustainadeficiencyistreatedasanewmatterwheniteither "4$ alterstheoriginaldeficiencyorrequiresthepresentationof $& differentevidence."WayneBolt&NutCo.v.Comm'r,93T.C.500, <&!( 507(1989).Butifthetheory"merelyclarifiesordevelopsthe '8#* originaldetermination[,it]isnotanewmatterinrespectof )$, which[theCommissioner]bearstheburdenofproof."Id. @+&.  ` TheEstate'smainargumentisthattheNoticewas  "latentlyambiguous,overlybroadandconfusing"andfailedto \ specifyalltheelementsoftheCommissioner'sargumentthatunder X 2036,theFLPinterestswere100%taxabletotheestate.The   EstatearguesthattheNoticeshouldhavedescribed"whythe `  considerationwasinadequate"and"theamountofconsiderationthe  \  Governmentwouldconsideradequate,"aswellas"whichofthe   alternativepossession,enjoymentorrighttoincometheoriesitis d  relyingonallegingataxableeventhasoccurredpursuantto `  2036(a)."TheEstatealsoarguesthattheNoticefailedto   explainhowtheCommissionervaluedtheFLPinterestsatthefair h marketvaluesoftheunderlyingrealestate.Therefore,theEstate d argues,theburdenofproofonallofthese"newmatters"should  havebeenplacedontheCommissioner.l #  11       l  ` AcceptanceoftheEstate'sargumentswouldamounttoa h requirementthattheNoticeofDeficiencybeasdetailedastrial  briefs.Thereisnosuchrequirement.Thestandardofspecificity p  fornoticesofdeficiencyismuchlower."Infact,ifadeficiency !l" noticeisbroadlywordedandtheCommissionerlateradvancesa "$ theorynotinconsistentwiththatlanguage,thetheorydoesnot t$& constitutenewmatter,andtheburdenofproofremainswiththe  &p!( taxpayer."Abattiv.Comm'r,644F.2d1385,1390(9thCir.1981); '#* seealsoShea,112T.C.at191.TheCommissionerdidnotseekto  changetheamountofthedeficiencyoradvanceatheory \ inconsistentwiththelanguageoftheNotice. X  ` TheEstatereliesforitsburdenshiftingargumenton   caseswithverydifferentfactsandwhichareeasily `  distinguishable.See,e.g.,EstateofThompsonv.Comm'r,84  \  T.C.M.(CCH)374,385(2002)(Commissionerhadtheburdenonthe   applicabilityof2036becausethenoticeofdeficiencydiscussed d  disallowanceofminorityandlackofmarketabilitydiscountsbut `  didnotmention2036.);Shea,112T.C.at192(Commissionerhad   theburdenontheapplicabilityof26U.S.C.66(b)andCalifornia h communitypropertylawbecauseneitherwasexplicitlyorimplicitly d referencedinthenoticeofdeficiency.).Here,theNotice  specificallynamed2036asthelegalbasisforthedeficiencyand l explainedthefactualbasisforthedeterminationasbeingMrs. h Abraham'sretentionofaninterestinalltheincomefromtheFLPs  throughherguardiandespitetransfersofFLPintereststoher p  childrenwithoutadequateconsideration. !l"  ` Astothevaluationquestion,whiletheNoticeitself "$ doesnotexplain,stepbystep,whytheCommissionerwantedto t$& includeinthegrossestatethetotalvalueoftheunderlyingreal  &p!( estate,itisclearthattheEstatewasneverconfusedaboutthe '#* Commissioner'stheory.TheEstate'staxreturnincluded x)$, attachmentsinwhichtheEstatecomputedthevalueoftheFLP $+t&. interestsnominallyheldbyMrs.Abrahamatthetimeofherdeath.  TheEstate'sowncomputationsbeganwith,andthenapplied \ discountsto,thefairmarketvalueoftheunderlyingrealestate. X ThiswaslogicalsincetheonlypropertyheldbytheFLPswasthe   realestateandrentalincomegeneratedbytherealestate.The `  NoticeofDeficiencycited2036andincludedinMrs.Abraham's  \  grossestatethefairmarketvalueoftheunderlyingrealestateas   reportedbytheEstate. d   ` Readincontext,theclearimplicationoftheNoticeof `  Deficiencywasthat1)theCommissionersoughttoinclude100%of   theFLPsinthegrossestate,and2)theCommissionervaluedthe h FLPsatthevalueoftheunderlyingrealestate,astheEstate d itselfdidinitscomputations.ThattheEstatesharedthis  understandingoftheCommissioner'stheoryisshownbytheEstate's l petitiontotheTaxCourtforaredetermination,inwhichitargued h thattheCommissionerwaswrongtohavedeterminedthattheentire  valueofeachFLPwasincludableinthegrossestateandalsowrong p  tohavevaluedtheFLPsatthevalueoftheunderlyingrealestate. !l" Cf.Olsenv.Helvering,88F.2d650,651(2dCir.1937)(lookingat "$ whethertaxpayersweremisledtodetermineadequacyofnoticeof t$& deficiency).  &p!(  ` TheCommissioner'svaluationisinfactbasedonthe '#* Estate'sownappraisal.Insuchcircumstances,"[t]hevaluationin x)$, thenoticeofdeficiencyisentitledtoapresumptionof $+t&. correctness."EstateofMagninv.Comm'r,184F.3d1074,1081(9th  Cir.1999).Totheextentthatanydiscountsmaybeappropriate \ duetothefactthattheassetsareintheformofFLPs,theburden X wasontheEstatetoshowtheappropriatenessofsuchdiscounts.   Thatburdenwascriticaltothequestionofwhetherthetransfers `  ofFLPinterestswereforadequateconsiderationinmoneyor  \  money'sworth,anaspectofthe2036analysisalsosetoutinthe   NoticeofDeficiency.TheNoticeofDeficiencywasadequateto d  providenoticetotheEstate,andtheCommissionerdidnotargue `  any"newmatter"overwhichburdenshiftingtotheCommissioner   wouldhavebeenappropriate.i #  12       h   IV.  d ApplicationofSection2036totheFLPInterestsTransferredBy , Mrs.AbrahamDuringHerLifetime  : ` Onthemerits,theEstatearguesthattheTaxCourterred ^ indeterminingthatunder2036,100%oftheFLPswereincludable  Z inMrs.Abraham'sgrossestate.TheEstatearguesthattheTax  Courterredbecause1)DonnaandDiana'spurchasesofpercentage b ! interestsintheFLPswerebonafidesalesforadequate "^#  consideration,and2)Mrs.Abrahamdidnotretaina"right"to,or # % "enjoy,"theincomefromthepercentageintereststransferredas  theresultofanagreementbetweentheparties. \   ` Webeginwiththestructureof2036.Section2036is X designedtocaptureinthedecedent'sgrossestate"transfersthat   areessentiallytestamentaryi.e.,transferswhichleavethe `  transferorasignificantinterestinorcontrolovertheproperty  \  transferredduringhislifetime."UnitedStatesv.Estateof   Grace,395U.S.316,320(1969).Atransferwouldbecoveredby d  2036ifthetransferor"retainedforhislife...the `  possessionorenjoymentof,ortherighttotheincomefrom,the   property."26U.S.C.2036.Butifsuchatransferwere"abona h fidesaleforanadequateandfullconsiderationinmoneyor d money'sworth,"2036wouldnotapply.s #  13      ׀Id.  BonaFideSale l  ` TheEstatearguesthatexceptfortheoutrightgiftsof h FLPinterests,DonnaandDianapaidadequateandfullconsideration  andpurchasedtheirotherpercentageinterestsintheFLPsinbona p  fidesalessothatitwaserrortoincludethosenongifted !l" interestsinMrs.Abraham'sgrossestate. "$  ` ThebiggesthurdleinthewayoftheEstate(andthe  reasonwhyitlostintheTaxCourt)isthatitdidnotmeetits \ burdentoprovethatDonnaandDianapaidadequateconsideration X fortheirFLPinterests.TheEstateproducednoadmissible   evidenceconcerningtheadequacyofthediscountedvalueoftheFLP `  percentageinterestsbecausethevaluationlettersfromKirchick,  \  onwhichtheEstaterelies,wereexcludedfromevidenceforthose   purposes.v #  14      ׀TheEstatedoesnotchallengethatevidentiaryruling d  bytheTaxCourthere. `   ` Attemptinganendrun,theEstatenowarguesthattheTax   CourterredasamatteroflawbecausetheTaxCourtusedthewrong h testforwhatconstitutedadequateconsideration.TheEstate d arguesthatwhetherfullandadequateconsiderationwaspaidshould  bemeasuredbythevalueoftheremainderinterestoftheFLP l percentagesatthetimeofthetransfersandnotthefeesimple h valueoftheFLPpercentagesatthetimeofthetransfers.The  EstatearguesthatDonnapaid$251,000for43.317%oftheDACFLP, p  whiletheremaindervalueofthatportionoftheDACFLP,computed !l" accordingtotheactuarialtablesinIRSregulations,wasonly "$ $227,410.Similarly,theEstateargues,Dianaalsooverpaidfor t$& herinterestsintheDASFLP,asmeasuredbytheactuarialvalueof  theremainderinterest.TheCommissioner,unsurprisingly,disputes \ theaccuracyofthesecomputations. X  ` Butthisdisputeisbesidethepoint.TheEstaterelies   onaseriesofcasesinwhichthedecedentsoldtheremainder `  interestinpropertyforitsactuarialvaluewhileretainingalife  \  estateintheproperty,andthecourtsheldinthosecasesthat   "adequateandfullconsideration"for2036purposesshouldbe d  measuredbywhatthedecedentsactuallysoldtheremainder `  interestsandnotthefeevalueofthepropertyasawhole.   See,e.g.,EstateofMagnin,184F.3dat1078;Wheelerv.United h States,116F.3d749,767(5thCir.1997);EstateofD'Ambrosiov. d Comm'r,101F.3d309,311,31718(3dCir.1996).Butthosecases  areinapplicabletothefactshere,wherenoevidenceintherecord l suggeststhatthepartiesevercontemplatedthetransfersassales h byMrs.AbrahamofremainderinterestsintheFLPs.   ` Infact,theevidenceintherecordisalltothe p  contrary.TheEstate'sargumenthereisdirectlyinconflictwith !l" itspositionattrial,whereitvigorouslyattemptedtoshowthat "$ DonnaandDianapurchasedpresentfeeinterestsintheFLPs.The t$& documentsmemorializingthetransfersofFLPinterestsfromMrs.  &p!( Abrahamtoherdaughtersdonotspeakofremainderinterests,and '#* thepartiescomputedtheamountofmoneypaidbyDonnaandDiana x)$, fortheFLPinterestsinrelianceon(unsubstantiated)minorityand $+t&. lackofmarketabilitydiscounts,notontheactuarialvalueofthe  remainderinterestsintheFLPs.TheEstateinitsappellatebrief \ arguesthat"[t]hetransfereewillnotpossessorenjoythe X propertyuntilthedeathofthetransferor,"whichisplainly   untenableinviewofthefactthatDonnaandDianareceivedmonthly `  paymentsfromtheFLPsduringMrs.Abraham'slifetime.  \   ` Theintereststhatweretransferredarebestdescribedas   presentinterestsintheFLPssubjecttoMrs.Abraham'sinterestin d  divertingallFLPincomeforherneeds,apowertobedetermined `  andexercisedatthediscretionofherguardianadlitem.Whenall   theevidenceintherecordsuggeststhatthetransferswerenot h treatedbyanybodyassalesofremainderinterestsintheFLPs,it d isimpossibleforthetransferstoqualifyas"bonafidesales[of  remainderinterests]foradequateandfullconsideration." l XLXX XL ` ItshouldbenotedthattheCommissionerdidgivethe h Estatecreditforthe$160,000paymentsunder26U.S.C.2043,  offsettingthesepaymentsfromthefullvalueoftheunderlying p  asset.SeeEstateofAbraham,87T.C.M.(CCH)at982.# XLXXXL# !l" RightandEnjoyment "$  ` TheEstatenextarguesthattheTaxCourterredin t$& holdingthatMrs.Abraham"retainedtherighttotheincomethat  &p!( theFLPsgeneratedtotheextentnecessarytomeetherneeds." '#* EstateofAbraham,87T.C.M.(CCH)at981.TheEstatemakestwo x)$, intertwinedarguments:1)Mrs.Abrahamdidnotretainalegally $+t&. enforceable"right"withinthemeaningof2036,and2)therewas  noagreementthatMrs.Abrahamwouldretainafirstaccessinterest \ inalltheincomefromtheFLPstotheextentnecessaryforher X support.    ` Inorderfor2036toapply,itisnotnecessarythat `  thedecedenttransferorretainalegallyenforceableinterestin  \  theproperty.SeeEstateofMaxwellv.Comm'r,3F.3d591,59394   (2dCir.1993);Guynnv.UnitedStates,437F.2d1148,1150(4th d  Cir.1971)."Aninterestretainedpursuanttoanunderstandingor `  arrangementcomeswithin2036."Guynn,437F.2dat1150."The   existenceornonexistenceofsuchanunderstandingisdetermined h fromallofthefactsandcircumstancessurroundingboththe d transferitselfandthesubsequentuseoftheproperty."Estateof  Harperv.Comm'r,83T.C.M.(CCH)1641,1648(2002).Thefinding l bytheTaxCourtthatsuchanunderstandingexistedisreviewedfor h clearerror.SeeEstateofMaxwell,3F.3dat594.Aswithother  issues,theEstate"bearstheburden(whichisespeciallyonerous p  fortransactionsinvolvingfamilymembers)ofprovingthatan !l" impliedagreementorunderstandingbetween[Mrs.Abraham]and[her] "$ childrendidnotexist."EstateofReichardtv.Comm'r,114T.C. t$& 144,15152(2000).  &p!(  ` WemaydisposeofthefirstpartoftheEstate'sargument '#* quickly.TheTaxCourtdidnotfindthatMrs.Abrahamretaineda x)$, legallyenforceable"right"toalltheincomefromtheFLPs. $+t&. ThereforetheargumentsthattheTaxCourtdecisionisinconflict  withvestedpropertyinterestsofthechildrenisirrelevant. \  ` WhattheTaxCourtdidfindwasthat"[t]hedocumentary X evidence,includingthestipulateddecreeoftheprobatecourt,and   theunderstandingofdecedent'schildrenandlegalrepresentatives `  demonstratethatdecedentwasentitledtoanyandallfunds  \  generatedfromthepartnershipforhersupportfirst."Estateof   Abraham,87T.C.M.(CCH)at981(emphasisinoriginal).This d  findingisnotclearlyerroneous. `   ` Evidenceadducedattrialshowsthatthemotivationfor   theformationoftheFLPswastoprotectMrs.Abraham'sfinancial h needssoastomaintainherinstatusquoandtopreventherestate d frombeingdrainedbylitigation.TheFLPswereformed,according  toDonna,sothat"[t]herewouldalwaysbemoneythere"forMrs. l Abraham.Theprobatecourtdecreememorializingtheunderstanding h ofthepartiesatthetimeofthecreationoftheFLPsexplicitly  made"moniesneededinthediscretionofthelimitedGuardianad p  litem...forIdaAbraham'ssupport"intoanobligationofthe !l" FLPswhichmustbemetbeforeanypartnershipincomecouldbe "$ disbursedtothepartners. t$&  ` TheEstatechoosestofocusontheFLPagreements,which  &p!( donotincludeMrs.Abraham'ssupportasobligationsoftheFLPs, '#* andarguesthatthediscretionofGoldman,Mrs.Abraham'sguardian x)$, adlitemandthepersonincontrolofthegeneralpartner $+t&. managementcompaniesfortheFLPs,islimitedbyhisfiduciary  dutiestotheotherlimitedpartners.Butthesearguments,at \ most,showthatMrs.Abraham'sfirstpriorityclaimonallthe X incomefromtheFLPsmaynotbelegallyenforceable.Theydonot   showthattherewasnosuchunderstandingamongtheparties. `   ` Infact,theweightoftheevidencewasjustthe  \  opposite.Theevidenceshowedthatallpartiesunderstoodthat   Goldman,asMrs.Abraham'sguardianadlitem,hadthediscretion d  andtheapprovalofthefamilytouseallFLPincome,ifnecessary, `  forMrs.Abraham'ssupport.DonnatestifiedthatifMrs.Abraham's   needsexceededhershareofthepartnershipincome,"ithadtocome h outofmypartnershipsharesormybrother's,buttheprotection d wasthereforherasaguaranteethatshewouldlivestatusquo."  GoldmantestifiedthathehadexclusivecontrolovertheFLP l accounts;heunderstoodhisauthorityanddutiestocomeprimarily h fromthecourtdecreeandalsounderstoodthathewasappointed  primarilytoworkonMrs.Abraham'sbehalf.Theevidenceisthat p  GoldmanfailedtosegregatewhatwassupposedtobeMrs.Abraham's !l" personalfundsfromthefundsinherrevocabletrustandcommingled "$ allmoniesinthebankaccountsfortheFLPs.Suchcomminglingin t$& disregardofthepartnershipformisindicativeofMrs.Abraham's  &p!( retainedinterestoveralltheFLPincome.SeeEstateofHarper, '#* 83T.C.M.(CCH)at1649.Goldmanalsotestifiedthatitwashis x)$, andthefamily'sunderstandingthatshoulditbenecessary,allFLP $+t&. incomecouldbeusedtopayMrs.Abraham'sexpenses,tothe  exclusionofpayingoutthesharestoanyoftheotherlimited \ partnersbecausethatwouldbe"whatthefamilywouldhave X wanted."f #  15          ` Neitherisitdispositivethat,accordingtotheEstate, `  theFLPs'paymentsforMrs.Abraham'smaintenanceneverexceeded  \  whatMrs.Abrahamwaslegallyentitledtobyvirtueofher   ownershipofFLPpercentageinterests.ThatMrs.Abraham's d  guardianadlitemdidnothavetheoccasionto,ordidnotchoose `  to,exercisewhatwasconcededtobeanavailableoptionthe   diversionofallFLPincomeforMrs.Abraham'smaintenance h cannotbetakentomaketheTaxCourt'sfindingthatthisoption d existedclearlyerroneous.   h   V.   o ` TheEstatemakesafinalargumentthattheTaxCourt x erredbyincluding100%oftheFLPsinMrs.Abraham'sgrossestate $t under2036because2036onlycoveredtheFLPintereststhat   Mrs.Abrahamtransferredtoherchildren,butnottheinterestsshe |  heldatherdeath.Interestsretainedbythedecedentatherdeath ( x  areofcourseincludableinthegrossestateunder26U.S.C. $  2033,k #  16      ׀thebasicestatetaxprovision,buttheEstatearguesthat   theTaxCourtdidnotaddresstheapplicabilityof2033andthus ,|  shouldbereversedatleastwithrespecttothoseinterests. ( Further,theEstatemaintainsthattheNoticeofDeficiencywas  confusingbecauseitwasnotclearwhetherthedeficiencywas 0 assessedunder2036or2033. ,  ` Thisargumentisfrivolous.TheCommissionerinvoked  2036inordertorecaptureinthegrossestatetheFLPinterests 4 Mrs.Abrahamhadallegedly"transferred."Section2033wasnever 0 anissueattrialnorwasitmentionedintheNoticeofDeficiency   becausetheEstateneverdisputedthattheFLPinterestsexplicitly 8!" heldbyMrs.Abrahamatherdeathwereincludableinhergross "4$ estate.Throughoutthelitigation,itwasassumedbyallparties $& thatthedisputewasonlyovertheinterestsMrs.Abraham <&!( transferredtoherchildrenduringherlifetime.Infact,the '8#* interestsheldbyMrs.Abrahamatthetimeofherdeathwere  reportedintheEstate'sinitialtaxreturn. \   VI.  X  ` TheTaxCourt'sdecisionis affirmed .