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equal amounts. Each of the gifts was worth less than $10,000,
and Rodney paid no gift tax.
None of the brothers have any background in accounting or
tax. Kaplan advised the brothers to make the transfers and
advised them that these transfers would be nontaxable gifts.
None of the brothers' wives ever met with Kaplan, and he never
advised the wives. Kaplan prepared all gift tax returns at
issue.
Respondent's Determinations
Gift Tax Liability
Respondent determined that the January 5, 1993, transfers by
Larry, Kathy, John, and Sandra to their respective nieces and
nephews in trust were, in substance, gifts made by each donee to
his or her own children in trust. Consequently, respondent
determined that each donee was entitled to only three (the number
of children each donee has) exemptions under section 2503(b).
Respondent disallowed six of the exemptions claimed by Larry,
Kathy, John, and Sandra on their 1993 gift tax returns relating
to the transfers to the nieces and nephews. Respondent also
determined that Larry, Kathy, John, and Sandra were liable for
the accuracy-related penalty under section 6662(a).
Donee Liability
By notice of transferee liability to the Larry Trust, the
John Trust, and the Duane Trust, respondent determined the
December 31, 1992, transfers of Sathers stock by Kathy, Sandra,
and Diane to each of their respective nieces and nephews in trust
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