- 24 -
return other property of less value in the form of
nonvoting common stock. The difference in values between
what the decedent gave up and what he received is deemed a
gift pursuant to section 2512(b). Petitioner's argument
that the decedent made no gift because no change in the
equity of the corporation resulted from the
recapitalization or because the decedent only transferred
voting rights which were of no value to the corporation
disregards the broad and comprehensive meaning of the
terms "gift" and "property" as used in section 2512. The
committee reports which accompanied the enactment of a
predecessor of section 2501 state as follows:
The terms "property," "transfer," "gift,"
and "indirectly" are used in the broadest and
most comprehensive sense; the term "property"
reaching every species of right or interest
protected by law and having an exchangeable
value.
The words "transfer * * * by gift" and
"whether * * * direct or indirect" are designed
to cover and comprehend all transactions (subject
to certain express conditions and limitations)
whereby, and to the extent * * * that, property
or a property right is donatively passed to or
conferred upon another, regardless of the means
or the device employed in its accomplishment.
For example, (1) a transfer of property by a
corporation without a consideration, or one less
than adequate and fully in money or money's
worth, to B would constitute a gift from the
stockholders of the corporation to B; (2) a
transfer by A to a corporation owned by his
children would constitute a gift to the children
* * *
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011