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clear that the gifts in trust left each beneficiary (the nieces
and nephews), to the extent of mutual value, in the same position
as they would have been in had their parents given the property
directly to them. In relation to one another, the nieces and
nephews all were left in the same economic position. The fact
that petitioners routed the gifts to their own children through
their nieces and nephews is immaterial, and we ignore that
routing for tax purposes. We sustain respondent's determinations
of gift tax for 1993 relating to Larry, Kathy, John, and Sandra.
For the same reasons, we also agree with respondent that Kathy,
Sandra, and Diane are each entitled to only three exclusion
amounts under section 2503 on their respective gift tax returns
for 1992.
Petitioners argue that the entire series of transactions
should be respected for tax purposes because Rodney gave property
on the same dates in 1992 and 1993, and he received nothing in
return. Petitioners argue that application of the step-
transaction doctrine mandates this result. That doctrine
requires that interrelated yet formally distinct steps in an
integrated transaction may not be considered independently of the
overall transaction. See Commissioner v. Clark, 489 U.S. 726,
738 (1989). When the step-transaction doctrine is applied,
separate steps of a transaction are collapsed into one taxable
event if the steps of the series are really prearranged parts of
a single transaction. See id.; Penrod v. Commissioner, 88 T.C.
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