- 6 -
following a transfer of property to the trust. The contingent
beneficiaries were treated as holding present interests in the
trust, and the settlor’s transfers of property to the trust were
treated as qualifying for the annual gift tax exclusion.
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving otherwise.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Respondent argues that understandings existed between
decedent and the 16 contingent beneficiaries of decedent’s trust
to the effect that the beneficiaries would not exercise their
rights to demand distributions of trust property, that these
understandings negate decedent’s donative intent, and that the
substance-over-form doctrine should apply to deny the annual gift
tax exclusions with regard to the interests held by the 16
contingent beneficiaries.
We disagree.
Pursuant to the provisions of the trust, for a 30-day period
following a transfer of property to the trust, the contingent
beneficiaries were given unrestricted rights to legally demand
immediate distribution to them of trust property. The evidence
does not establish that any understandings existed between
decedent and the beneficiaries that the contingent beneficiaries
would not exercise those rights following a transfer of property
to the trust. At trial, several credible reasons were offered by
the trust beneficiaries as to why they did not exercise their
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011