Estate of Bongard v. Comm'r
United States Tax Court
In 1980, D incorporated Empak, Inc. In 1986, D established an irrevocable stock accumulation trust (ISA Trust) and funded it with some of his Empak stock. In the mid-1990s it was determined by Empak's board of directors and advisers that pooling all of D's family's Empak stock in a holding company, WCB Holdings, LLC. (WCB Holdings), would better position Empak for a corporate liquidity event, which was necessary to raise capital and remain competitive.
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In 1980, D incorporated Empak, Inc. In 1986, D established an irrevocable stock accumulation trust (ISA Trust) and funded it with some of his Empak stock. In the mid-1990s it was determined by Empak's board of directors and advisers that pooling all of D's family's Empak stock in a holding company, WCB Holdings, LLC. (WCB Holdings), would better position Empak for a corporate liquidity event, which was necessary to raise capital and remain competitive. On Dec. 28, 1996, D and ISA Trust capitalized WCB Holdings by transferring to WCB Holdings their respective shares of Empak stock, and in…
1Concurring in part, dissenting in partChiechi, J.
The majority opinion acknowledges that section 2036(a)(1) will not apply unless: (1) Decedent made a transfer; (2) such transfer was not a bona fide sale for an adequate and full consideration in money or money’s worth; and (3) under such transfer decedent retained for his life the possession or enjoyment of, or the right to the income from, the property transferred. The majority opinion holds that decedent’s transfer to the Bongard Family Limited Partnership (BFLP) of his WCB Holdings class B membership units was a transfer which was not a bona fide sale for an adequate and full…
2Cases cited13 opinions
- Moline Properties, Inc. v. CommissionerSupreme Court of the United States · 1943
- Hanover Bank v. CommissionerSupreme Court of the United States · 1962
- United States v. ByrumSupreme Court of the United States · 1972
- United States v. O'MALLEYSupreme Court of the United States · 1966
- Estate of Theodore Thompson, Deceased, Betsy T. Turner v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 2004
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