The Partnership Capital Freeze: An Examination of Control Retention by Donor Partners

Authors

Gary N. Clatterbuck, University of Nebraska College of LawFollow

Abstract

I. Introduction—Estate Planning for the Family Business

II. Identifying the Control Objectives of the Owner-Operator

III. Considerations of the Control Plan … A. Formation of the Partnership … B. The Partnership Agreement … C. Distributive Shares of Profits and Gains … D. The Ability to Transact with the Partnership … E. Conflict between Active and Inactive Ownership Interests

IV. Income Tax Consequences … A. Transfer Restrictions … B. Retention of Essential Assets … C. Operational Controls … D. Competing Considerations

V. Estate Tax Consequences of Retained Controls … A. Retained Controls by the Donor-Partner … B. Letter ruling 8724005 … C. United States v. Bryan … 1. The Section 2036(a)(2) Argument … 2. The Section 2036(a)(1) Argument … 3. Application to Partnership Estate Planning … D. Section 2038 Obstacles … E. Partnership Case Law

VI. Conclusion

Recommended Citation

Gary N. Clatterbuck, The Partnership Capital Freeze: An Examination of Control Retention by Donor Partners, 59 Neb. L. Rev. (1980)
Available at: https://digitalcommons.unl.edu/nlr/vol59/iss3/6