The Kimbell VictoryThe Kimbell Victory

Rorie M. Sherman Editor in Chief

Estate-planning lawyers are cheering a recent taxpayer win in the ongoing battle with the Internal Revenue Service over family limited partnerships (FLPs). The U.S. Court of Appeals for the Fifth Circuit dealt the IRS a stinging defeat May 20 in Kimbell v. United States (No. 03-10529), when it overturned a lower court's decision and found that $2.5 milllion in assets transferred by a family matriarch into a family limited partnership were not includible in her estate under Internal Revenue Code Section 2036(a). That provision returns assets transferred before death to the estate, unless the transfer was “a bona fide sale for an adequate and full consideration.”

The family had argued that only Ruth Kimbell's...