Jul 1, 2008 12:00 PM, By David A. Handler Alison E. Lothes

By: By David A. Handler Alison E. Lothes

Partnership restrictions disregarded under IRC Section 2703. Estate-planning lawyers are buzzing about the Tax Court's recent decision on family limited partnerships, H. Holman, Jr., 130 TC 12 (May 27, 2008), because the court ignored commonly used restrictions on transfers of partnership interests for gift tax valuation purposes under Internal Revenue Code Section 2703.

In November 1999, Thomas and Kim Holman transferred about 70,000 shares of Dell stock to a limited partnership in exchange for general and limited partnership interests. A trust for their children contributed 100 Dell shares for limited partnership (LP) interests. Just one week later, they made a gift of LP interests to a custodial account for one of their daughters. A month later, custodial accounts for their other three children contributed Dell stock for LP interests. In January 2000 and January 2001, the Holmans made gifts of LP interests to the trust for their children.

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