Estate of Suzanne W. Cullison, Deceased, J. Greg Cullison, Personal Representative - Page 16

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          Commissioner v. Wemyss, supra at 306-307, the Supreme Court                 
          interpreted section 2512 as dispensing with the test of "donative           
          intent" in favor of a "much more workable external test" that               
          "where 'property is transferred for less than an adequate and               
          full consideration'", then the excess "'shall, for  * * *  [the             
          purpose of gift tax] be deemed a gift'".  Thus, the Federal gift            
          tax provisions reach further than the common law concept of gifts           
          and embrace sales and other exchanges of property where the value           
          of the property transferred exceeds the value of the                        
          consideration received.  Sec. 25.2512-8, Gift Tax Regs.  As a               
          result, in determining whether the private annuity transaction in           
          the instant case is subject to gift tax, we must determine the              
          value of decedent's land and the value of the private annuity               
          (i.e., the consideration decedent received).3                               
               Transfers of property in the ordinary course of business,              
          however, are not subject to gift tax.  Sec. 25.2512-8, Gift Tax             
          Regs.  To qualify, the transaction must be bona fide, at arm's              
          length, and free from donative intent.  Id.; see Harwood v.                 
          Commissioner, 82 T.C. 239, 257-258 (1984), affd. without                    


               3  Respondent no longer contends (as was originally                    
          determined in the Mar. 13, 1996, notice of deficiency) that no              
          private annuity, in fact, was payable to decedent.  On its estate           
          tax return, petitioner included in decedent's gross estate the              
          two outstanding annuity payments owed to decedent by her                    
          grandchildren.  The parties have now further stipulated that the            
          gross estate is to be increased by an additional $46,072 to                 
          reflect the accrued interest owed on these annuity payments.                




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