- 10 - equal amounts. Each of the gifts was worth less than $10,000, and Rodney paid no gift tax. None of the brothers have any background in accounting or tax. Kaplan advised the brothers to make the transfers and advised them that these transfers would be nontaxable gifts. None of the brothers' wives ever met with Kaplan, and he never advised the wives. Kaplan prepared all gift tax returns at issue. Respondent's Determinations Gift Tax Liability Respondent determined that the January 5, 1993, transfers by Larry, Kathy, John, and Sandra to their respective nieces and nephews in trust were, in substance, gifts made by each donee to his or her own children in trust. Consequently, respondent determined that each donee was entitled to only three (the number of children each donee has) exemptions under section 2503(b). Respondent disallowed six of the exemptions claimed by Larry, Kathy, John, and Sandra on their 1993 gift tax returns relating to the transfers to the nieces and nephews. Respondent also determined that Larry, Kathy, John, and Sandra were liable for the accuracy-related penalty under section 6662(a). Donee Liability By notice of transferee liability to the Larry Trust, the John Trust, and the Duane Trust, respondent determined the December 31, 1992, transfers of Sathers stock by Kathy, Sandra, and Diane to each of their respective nieces and nephews in trustPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011