While not earth shattering, a Court of Appeal just issued a ruling in the above referenced case.
First, in the facts are that parents created an FLP and transferred into it their substantial holdings of Dell stock. Five days later, they gifted some of the FLP ownership interest to their children. When they filed their gift tax return they claimed valuation discounts.
The IRS argued that the transfer of the FLP interest was tantamount to a gift of the Dell stock and thus no valuation discounts should apply based upon the logic of Senda v. Commissioner; T.C. Memo. 2004-160, affd. 433 F.3d 1044 (8th Cir. 2006). The Tax Court ruled and the Court of Appeals agreed there was no “simultaneous gift”, apparently ignoring any “step transaction” arguments.