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payments to be paid from gift proceeds do not reduce value of
gift); Rev. Rul. 81-230, 1981-2 C.B. 186 (value of gift not
reduced for additional tax that could subsequently be imposed
under section 2032A(c)).
This Court has previously addressed this argument. In Gray
v. Commissioner, a Memorandum Opinion of this Court dated June 7,
1944, 3 T.C.M. (CCH) 552, 555, 44 P-H Memo T.C. par. 44,203 at
646, it was stated:
In the instant proceeding, however, the property
transferred by the donor was not subject, at the time
of transfer, to any lien, mortgage or pledge. The
statute (section 510 Revenue Act of 1932) makes the
donee "personally liable for such [gift] tax to the
extent of the value of such gift." It contains no
provision authorizing a reduction on account of any
lien resulting from the gift. The obvious intent of
the legislation, especially the transferee provisions
of the statute (Sec. 526 Revenue Act of 1932), is to
protect the revenue by providing, in effect, that one
who receives property by gift may, if necessary, be
required to pay all of it (but no more) over to the
fiscus. If the construction urged upon us by the
petitioners should be adopted it is obvious that many
situations could arise where a donee would be permitted
to retain a portion of the gift even though the tax, or
a substantial portion of it, be unpaid. * * *
See also Moore v. Commissioner, 146 F.2d 824, 826 (2d Cir. 1945),
affg. 1 T.C. 14 (1942); Pitcairn v. Commissioner, a Memorandum
Opinion of this Court dated May 22, 1944, 3 T.C.M. (CCH) 584,
489-90, 44 P.H. Memo T.C. par. 44,185 at 585-86. We reach the
same conclusion here.
Petitioners argue that the situation before us is similar
to, and should be treated as, a "net gift" transaction. Where a
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