FLP survives IRS challenge — Court notes transfer of real estate was for a legitimate nontax reason

Description

Abstract: Family limited partnerships (FLPs) offer a tax-efficient way to transfer assets — including real estate — to family members. This article discusses a case in which a couple transferred woodlands properties to an FLP, so that they could become a family asset that the family could eventually build homes on for sale purposes. The U.S. Tax Court refuted the IRS’s argument that the transfer didn’t qualify as a “bona fide sale for adequate and full consideration.” A sidebar lists “partnership formalities” an FLP must observe. Citation: Estate of Joanne Harrison Stone (Tax Court 2012)