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beneficiary per year. Sec. 2503(b); sec. 25.2503-2(a), Gift Tax
Regs. Gifts qualifying for the annual exclusion are not counted
in the computation of an estate’s Federal estate tax liability.
Sec. 2001(b).
Only gifts of present interests in property qualify for the
annual gift tax exclusion. Gifts of future interests in property
(i.e., interests in property that are limited to commence in use,
possession, or enjoyment at some future date) do not qualify for
the annual exclusion. Sec. 2503(b); sec. 25.2503-3(a), Gift Tax
Regs.
Generally, interests in property qualify as present
interests in property where they represent the unrestricted right
to immediate use, possession, or enjoyment of property or income
from property. Sec. 25.2503-3(b), Gift Tax Regs.
Where trust beneficiaries, including minor and contingent
beneficiaries, are given unrestricted rights to demand immediate
distributions of trust property, the beneficiaries generally are
treated, under section 2503(b), as possessing present interests
in property. Estate of Cristofani v. Commissioner, 97 T.C. 74,
84-85 (1991); see also Crummey v. Commissioner, 397 F.2d 82, 88
(9th Cir. 1968), affg. in part and revg. in part T.C. Memo. 1966-
144; Perkins v. Commissioner, 27 T.C. 601, 605-606 (1956).
In Estate of Cristofani v. Commissioner, supra, contingent
beneficiaries of a trust were given the unrestricted right to
legally demand immediate distribution to them of trust property
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Last modified: May 25, 2011