I recommend (highly) following the advice of counsel since you obviously have secured same.
Your attorney is correct on two points and those are (a) there is really no need to file a 709 at this late date (but there was a gift) and (b) the transaction was part gift/part sale, per Section 1.1015-4(a), as I indicated in my previous post.
Of course, this scenario is complicated, but it appears as if you need to track down the figures your attorney is requesting.
