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being under any compulsion to buy or to sell, and both
having reasonable knowledge of the relevant facts.
Secs. 25.2512-1, 25.2512-3, Gift Tax Regs.; see also Snyder
v. Commissioner, 93 T.C. 529, 539 (1989); Estate of Hall
v. Commissioner, 92 T.C. 312, 335 (1989); See generally
United States v. Cartwright, 411 U.S. 546 (1973).
We reject petitioner's first argument that the
decedent made no gift in connection with the recapital-
ization. A transfer of property by an individual to a
corporation for less than adequate and full consideration
in money or money's worth generally represents gifts by the
individual to the shareholders of the corporation to the
extent of each shareholder's proportionate interest in the
corporation. See Kincaid v. United States, 682 F.2d 1220,
1224, 1226 (5th Cir. 1982); Heringer v. Commissioner, 235
F.2d 149, 151 (9th Cir. 1956), modifying and remanding
21 T.C. 607 (1954); CTUW Georgia Ketteman Hollingsworth v.
Commissioner, 86 T.C. 91, 97 (1986); sec. 25.2511-1(h)(1),
Gift Tax Regs.; cf. Chanin v. United States, 183 Ct. Cl.
840, 393 F.2d 972 (1968). This is no less true when the
property transferred to the corporation by the donor is the
corporation's own stock.
In these cases, the decedent transferred property to
HBC in the form of voting common stock and received in
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