Corpus

General partner denied daughter's request to sell 5% LP interest to son-in-law for $1.4M, citing family structure preservation and divorce risk. Transfer would have created basis mismatch requiring 754 election. Price was 2.2x discounted formation value, creating potential inconsistency with original 35% gift tax discounts claimed two years prior.

Taxpayer formed family limited partnership holding three commercial properties ($17.5M equity), immediately gifted 50% of LP interests to spouse and children using 35% combined discount (25% DLOM, 15% DLOC), while retaining 49% LP interest and 50% ownership of GP entity with full distribution authority. Spouse co-owns GP but has documented early-stage dementia.

Taxpayer formed FLP to hold eight commercial properties ($40M FMV, $15M debt, $3M annual NOI), contributed all assets individually, retained 2% GP interest with full management control, and gifted 98% LP interests to three children within same month as formation and funding, claiming 30% combined valuation discount.

68-year-old donor contributed six apartment buildings ($30M value, $2M debt) to FLP, retained 1% GP and 30% LP interests, and gifted 69% LP interests to three adult children within three months. Partnership pays donor $200k annual guaranteed payment for management services and distributes remaining $1M NOI proportionally quarterly to all partners including children.