-26-
in the gifts, were therefore separate and independent from the
pledge of the CD.
Moreover, it was not the donor who pledged the CD, but the
agent of the recipients. Thus, pledging the CD's was a voluntary
act. Therefore, both the recipients and First National treated
the CD's as the recipients' present interest.
Finally, decedent bore the burden of paying the bank the
interest on the loans when it became due, and the donees enjoyed
the present benefit of the interest on the CD's paid to them by
the bank; therefore, the transfers were complete in substance as
well as in form. Thus, at least as to the individual recipients,
decedent relinquished, and the donees acquired, dominion and
control over the gifts. Muserlian v. Commissioner, T.C. Memo.
1989-493 (in prearranged transfers among family members the issue
is whether the taxpayer retained all valuable incidents of
ownership, control, and enjoyment of the funds while making the
semblance of a gift), affd. 932 F.2d 109 (2d Cir. 1991); Elbert
v. Commissioner, 45 B.T.A. 685 (1941). (The effect on the trusts
is discussed below.)
Deductibility of the Annual Gifts to the Individual Donees
We hold that the gifts of $10,000 made each year in 1985,
1986, 1987, and 1988 to Lewis, Betty, Jack, and Jack's wife,
Ellen, were completed gifts in which the donees had a present
interest.
This holding, however, is not a holding that the $10,000
transfers in 1985 and 1986 to Lewis, Betty, and Jack are excluded
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011