Case: 19-60244 Document: 00515365530 Page: 1 Date Filed: 03/31/2020 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED March 31, 2020 No. 19-60244 Lyle W. Cayce Clerk ESTATE OF FRANK D. STREIGHTOFF, DECEASED, Elizabeth Doan Streightoff, Executor, Petitioner - Appellant v. COMMISSIONER OF INTERNAL REVENUE, Respondent - Appellee Appeal from the Decision of the United States Tax Court Before HIGGINBOTHAM, STEWART, and ENGELHARDT, Circuit Judges. CARL E. STEWART, Circuit Judge: Respondent–Appellee the Commissioner of Internal Revenue issued Petitioner–Appellant Estate of Frank D. Streightoff (the “Estate”) a notice of deficiency for the Estate’s 2012 tax return. The Commissioner determined that the Estate had a $491,750.00 tax liability which differed from the Estate’s tax return valuation. The Estate petitioned the U.S. tax court to challenge the deficiency. Following a bench trial, the tax court sustained the Commissioner’s determinations in a written order. We affirm the tax court’s decision. Case: 19-60244 Document: 00515365530 Page: 2 Date Filed: 03/31/2020 I. The parties have stipulated to this set of facts. Frank D. Streightoff (the “decedent”) died testate on May 6, 2011. His daughter, Elizabeth Doan Streightoff (“Elizabeth”), serves as the executor of the decedent’s Estate. A. Estate Planning The decedent made the following estate plans on October 1, 2008: SILP and the Partnership Agreement Streightoff Investments, LP (“SILP”), a Texas limited liability partnership, was formed. SILP is funded using the decedent’s assets. The decedent held an 88.99% limited partner ownership interest in SILP. The decedent’s daughters each held a 1.54% limited partner ownership interest. His sons and former daughter-in-law each held a 0.77% limited partner ownership interest. SILP’s sole General Partner is Streightoff Management, which holds a 1.00% limited partnership ownership interest. Elizabeth is the Managing Member of Streightoff Management. In relevant part, the SILP Partnership Agreement (“SILP Agreement”) states: 9.2 Permitted Transfers. . . . [A]n Interest Holder may at any time [t]ransfer his Interests to (a) any member of transferor’s Family, (b) the transferor’s executor, administrator, trustee or personal representative to whom such interests are transferred at death or involuntarily by operation of law, or (c) [to any purchaser, but subject to the right of first refusal held by the persons listed in section 9.4] ... 9.7 Admissions of Interest Holders as Partners. A transferee of an Interest may be admitted to the Partnership as a Substituted Limited Partner only upon satisfaction of the conditions set forth below: Case: 19-60244 Document: 00515365530 Page: 3 Date Filed: 03/31/2020 (a) Each General Partner consents to such admission which consent may be granted or withheld in the sole and absolute discretion of each General Partner; (b) The Interests with respect to which the transferee is being admitted were acquired by means of a Permitted Transfer . . . . ... 12.6 Governing Law. Any matter which may arise hereunder which is no therein specifically provided for shall be determined in accordance with and governed by the Laws of the State of Texas including the Texas Uniform …
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