- 16 -
The parties agree that petitioner transferred $100,000 to
each of her sons during 1982. The only dispute here is whether
the transfers at issue were loans or gifts. Petitioners contend
that each of those transfers was in form and in substance a loan,
and not a gift, for Federal gift tax purposes because petitioner
entered into a bona fide creditor-debtor relationship with each
of her sons at the time of such transfers.10 Respondent contends
that although each of the transfers at issue was, in form, a loan
that purported to establish such a relationship, in substance,
each such transfer was a gift.
The question whether a taxpayer has entered into a bona fide
creditor-debtor relationship pervades the Federal tax law. See,
e.g., Estate of Maxwell v. Commissioner, 98 T.C. 594, 603-604
(1992), affd. 3 F.3d 591 (2d Cir. 1993); Estate of Kelley v.
Commissioner, 63 T.C. 321, 325 (1974); Estate of Van Anda v.
Commissioner, 12 T.C. 1158, 1162 (1949), affd. per curiam 192
F.2d 391 (2d Cir. 1951). "Transactions within a family group are
subject to special scrutiny, and the presumption is that a trans-
fer between family members is a gift". Harwood v. Commissioner,
82 T.C. 239, 258 (1984) (citing Estate of Reynolds v. Commis-
10 Although petitioners' argument is not entirely clear, they
appear to contend that under Dickman v. Commissioner, 465 U.S.
330 (1984), only the interest foregone on demand loans, and not
the principal of such loans, may be considered a gift for Federal
gift tax purposes. Petitioners' reliance on Dickman is
misplaced, since Dickman requires a finding of a bona fide debt.
That is the precise issue presented in these cases.
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