This presents a "first day" view of the Strangi decision issued by the Fifth Circuit Court of Appeals. The Fifth Circuit upheld the Tax Court's decision in TC Memo 2003-145, but did so without ruling on the merits of the 2036(a)(2) analysis that many practitioners viewed as the major concern in that case.
From a CPA's perspective, this discussion looks at the risks involved from the fact that it's become clear that 2036(a)(1) attacks on operational problems with the FLP will render the FLP ineffective as a transfer vehicle. Accountants' journal entries are a recurring theme in the cases that lose in court on 2036(a)(1), and this fact should not be lost on CPAs who will be doing 1065s and other accounting for such partnerships.
This Podcast provides a quick discussion of what types of clients likely should not be advised to make use of a family limited partnership given the Section 2036(a)(1) problems. This Podcast is sponsored by Leimberg Information Services, Inc. at ht