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the estate tax return failed to reflect certain taxable gifts
that Hilda had previously reported. In 1990, when Hilda reported
on a gift tax return her share of the $300,000 transfer (i.e.,
$130,000), she listed prior taxable gifts of $480,000 (i.e., the
amount she reported transferring in 1989). In fact, Hilda had
previously reported taxable gifts of $610,488.44, as shown in the
following chart:
Date Taxable Gifts
March 1976 $5,988.44
December 1976 10,500.00
September 1979 34,000.00
December 1979 80,000.00
1989 480,000.00
Total 610,488.44
Respondent has proposed an adjustment to prior taxable gifts
of $130,488 (i.e., $610,488 minus $480,000). This adjustment
would have the effect of increasing Hilda’s 1990 gift tax
liability by $23,029 and the estate tax liability by $47,061.
Petitioner has conceded that Hilda omitted $130,488 in prior
taxable gifts that should have been included on her 1990 gift tax
return and on the estate tax return. Petitioner contends,
however, that the characterization of the 1986 transaction as a
sale and of the September 24, 1990, transaction as a gift were in
error.
OPINION
Petitioner contends that James and Hilda should not be
treated as having transferred the House to David and Billie Jean
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