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the beneficiaries exercised his or her right to demand a
distribution from the trust, and none of the beneficiaries
requested notification of future transfers of property to the
trust.
No understandings existed between decedent, the trustees,
and the contingent beneficiaries to the effect that the
beneficiaries would not exercise their rights to demand
distributions from the trust.
On petitioner’s Federal estate tax return, petitioner
treated the interests of the 16 contingent beneficiaries as
qualifying for 16 annual gift tax exclusions under section
2503(b) with regard to decedent’s 1990 transfer of the commercial
building to the trust.
On audit of petitioner’s Federal estate tax return,
respondent denied the above 16 annual gift tax exclusions claimed
by petitioner on the grounds that the contingent beneficiaries
did not hold present interests in the trust.
OPINION
Generally, the annual gift tax exclusion under section
2503(b) applies to gifts made in trust. Helvering v. Hutchings,
312 U.S. 393, 396-397 (1941); sec. 25.2503-2(a), Gift Tax Regs.
The annual exclusion provides that gifts made to
beneficiaries during a calendar year shall be excluded from
taxable gifts to the extent they do not exceed $10,000 per
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Last modified: May 25, 2011