Keller, et al. v. United States, No. 10-41311, 2012 U.S. App. LEXIS 20119 (5th Cir. Sept. 25, 2012), aff’g., 2009 U.S. Dist. LEXIS 73789 (S.D. Tex. Aug. 20, 2009)

(before death, the decedent had begun the process of creating a family limited partnership (FLP), but failed to finalize it and transfer community property bonds (worth $300 million) to the FLP before death; decedent died on May 15, 2000, and estate filed Form 706 and paid $147 million in federal estate tax in February of 2001; tax counsel later learned of TX caselaw supporting discounts for FLP’s created and funded post-death and completed formation and funding of FLP that would make the FLP be deemed to be in existence before decedent’s death; as such, estate would lack sufficient liquid assets to pay estate tax; thus, estate tax payment restructured as loan from FLP with associated interest; refund claim filed due to valuation discount claim as result of FLP and estate claimed deduction for interest on loan; trial court ruled for estate based on TX law and appellate court affirmed; under TX law, intent of asset owner to make an asset partnership property determined property ownership with respect to initial partnership capitalization – title to property passed to FLP contemporaneous with its formation; discount upheld as was deduction for loan interest as an administrative expense).