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Bona Fide SaleBona Fide Sale

Under several Internal Revenue Code sections, the property a person transfers will remain in his gross estate if he retains certain rights or powers over it. There is is an exception for transfers made for a bona fide sale for an adequate and full consideration in money or money's worth, in IRC Sections 2035, 2036, 2037 and 2038, among others. But what, exactly, is a bona fide sale? Recent rulings

David A. Handler

February 1, 2005

15 Min Read
Wealth Management logo in a gray background | Wealth Management

David A. Handler, partner, Kirkland & Ellis LLP, Chicago

Under several Internal Revenue Code sections, the property a person transfers will remain in his gross estate if he retains certain rights or powers over it. There is is an exception for transfers made for a “bona fide sale for an adequate and full consideration in money or money's worth,” in IRC Sections 2035, 2036, 2037 and 2038, among others. But what, exactly, is a bona fide sale? Recent rulings have shed some light. Unfortunately, the federal appeals courts do not agree. It's therefore vital for estate planners to keep up with the latest decisions.

In Technical Advice Memorandum 200432015 (March 10, 2004), H (let's call him Tom) and his wife (let's call her Anna) formed a limite...

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About the Author

David A. Handler

 

David A. Handler is a partner in the Trusts and Estates Practice Group of Kirkland & Ellis LLP.  David is a fellow of the American College of Trust and Estate Counsel (ACTEC), a member of the NAEPC Estate Planning Hall of Fame as an Accredited Estate Planner (Distinguished), and a member of the professional advisory committees of several non-profit organizations, including the Chicago Community Trust, The Art Institute of Chicago, The Goodman Theatre, WTTW11/98.7WFMT (Chicago public broadcasting stations) and the American Society for Technion - Israel Institute of Technology. He is among a handful of trusts & estates attorneys featured in the top tier in Chambers USA: America's Leading Lawyers for Business in the Wealth Management category, is listed in The Best Lawyers in America and is recognized as an "Illinois Super Lawyer" bySuper Lawyers magazine. The October 2011 edition of Leading Lawyers Magazine lists David as one of the "Top Ten Trust, Will & Estate" lawyers in Illinois as well as a "Top 100 Consumer" lawyer in Illinois. 

He is a member of the Tax Management Estates, Gifts and Trusts Advisory Board, and an Editorial Advisory Board Member of Trusts & Estates Magazine for which he currently writes the monthly "Tax Update" column. David is a co-author of a book on estate planning, Drafting the Estate Plan: Law and Forms. He has authored many articles that have appeared in prominent estate planning and taxation journals, magazines and newsletters, including Lawyer's Weekly, Trusts & Estates Magazine, Estate Planning Magazine, Journal of Taxation, Tax Management Estates, Gifts and Trusts Journal. He is regularly interviewed for trade and news periodicals, including The Wall Street Journal, The New York Times, Lawyer's Weekly, Registered Representative, Financial Advisor, Worth and Bloomberg Wealth Manager magazines. 

David is a frequent lecturer at professional education seminars. David concentrates his practice on trust and estate planning and administration, representing owners of closely-held businesses, principals of private equity/venture capital/LBO funds, executives and families of significant wealth, and establishing and administering private foundations, public charities and other tax-exempt entities. 

David is a graduate of Northwestern University School of Law and received a B.S. Degree in Finance with highest honors from the University of Illinois College of Commerce.