The Potential Impact of Strangi Est. On Family Business Entities

Posted: 22 Jun 2004

See all articles by Mitchell M. Gans

Mitchell M. Gans

Hofstra University - School of Law


Family limited partnerships are a widely used estate-planning tool. Recently, however, the Tax Court has begun using an unconventional approach in attacking abusive partnerships, section 2036. While, in the early cases, the court used section 2036(a)(1) to deny partnership discounts, the court in Strangi broke new ground in its use of section 2036(a)(2) as an alternative ground for disregarding the partnership. If Strangi's reading of section 2036(a)(2) is sustained - and the Fifth Circuit's recent decision in Kimbell suggests that it will be - lawyers will have to reconsider the ways in which they structure new partnerships. In addition, in many cases, existing partnerships will have to be restructured in order to avoid a section 2036(a)(2) attack. The article examines the Strangi decision, critiquing the court's analysis. It then goes on to suggest how new partnerships should be structured, and how existing partnerships should be restructured, in order to neutralize the section 2036(a)(2) threat that the decision poses.

Suggested Citation

Gans, Mitchell M., The Potential Impact of Strangi Est. On Family Business Entities. Available at SSRN:

Mitchell M. Gans (Contact Author)

Hofstra University - School of Law ( email )

121 Hofstra University
Hempstead, NY 11549
United States
(516) 463-5876 (Phone)

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