- 47 -
the 3,000 shares of preferred stock of FIC received by each
decedent in the Recapitalization was $300,000; and (3) after
applying the $3,000 annual exclusion, each decedent made a
taxable gift to Robert in the Recapitalization in the amount of
$121,552. For purposes of computing Maude's taxable estate, we
also find that the fair market value of 6 shares of FIC common
stock that she transferred to Robert in 1980 was $82,859,
resulting in a taxable gift of the same amount.
B. Additions to Tax
1. Failures To File 1981 Gift Tax Returns
For the 1981 taxable year, individuals who were required to
file a timely gift tax return but did not do so are subject to an
addition to tax equal to 5 percent of the amount of tax that
should have been shown on the return, for every month in which
the failure to file continues, subject to a maximum of 25
percent. Sec. 6651(a)(1).
The addition to tax for failure to timely file a gift tax
return may be avoided if the taxpayer can show that his failure
to file was due to reasonable cause and not due to willful
neglect. Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241,
245 (1985); Logan Lumber Co. v. Commissioner, 365 F.2d 846, 853
(5th Cir. 1966) (citing Breland v. United States, 323 F.2d 492
(5th Cir. 1963)), affg. in part and remanding in part T.C. Memo.
1964-126; Home Builders Lumber Co. v. Commissioner, 165 F.2d 1009
(5th Cir. 1948); Estate of Reynolds v. Commissioner, 55 T.C. 172,
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