Estate of Floy M. Christensen - Page 23

                                       - 23 -                                         
               could write checks on the joint account does not char-                 
               acterize all of those checks as gifts from Floy                        
               Christensen as Petitioner argues.  Petitioner cites to                 
               Treas. Reg. �� 25.2511-1(h)(4) and 25.2511-1(c)(1) for                 
               support of its argument.  Treas. Reg. � 25.2511-1(c)(1)                
               provides that gift tax applies to gifts indirectly                     
               made; it does not, however, establish the recipient of                 
               a particular gift.  In the context of this case, Treas.                
               Reg. � 25.2511-1(c)(1) does not establish that the                     
               payees shown on the checks in issue were the recipients                
               of gifts from Floy Christensen.  Additionally, Treas.                  
               Reg. � 25.2511-1(h)(4) provides that if Floy                           
               Christensen created the joint account for herself and                  
               her children, there is a gift to her children when they                
               draw upon the account for their own benefit to the                     
               extent they have no obligation to account to Floy                      
               Christensen for the amount withdrawn.                                  
                    The regulation Petitioner relies on is inapplica-                 
               ble to this case.  Petitioner’s argument fails because,                
               under Washington State law, Floy Christensen’s children                
               had an obligation to account to her for amounts they                   
               withdrew from the joint account.  In determining                       
               whether a person with access to a joint account created                
               by another has an obligation to account to the deposi-                 
               tor, courts have looked to whether the depositor had                   
               given up dominion and control over the deposited funds.                
               See, e.g., Haneke v. United States, 548 F.2d 1138 (4th                 
               Cir. 1977).  Floy Christensen did not give up dominion                 
               and control over the funds in the joint account.  In                   
               fact, Petitioner stipulated to the fact that at all                    
               times all of the funds in the joint account belonged to                
               Floy Christensen.  Because all of the funds in the                     
               joint account belonged to her, she had the right to                    
               challenge any of the withdrawals made by her children.                 
               Wash. Rev. Code � 30.22.130.  [Fn. ref. omitted.]                      
               We find the estate’s reliance on sec. 25.2511-1(c)(1),                 
          (g)(1), and (h)(4), Gift Tax Regs., to be misplaced.  We have               
          concluded that Mr. Christensen and Ms. Hastie had an obligation             
          to account to decedent for the amounts of funds withdrawn by the            
          respective checks in question that they signed and that decedent            
          had the right to sue them for recovery of those funds, which was            

Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011