- 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Christensen for the amount withdrawn.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to account to decedent for the amounts of funds withdrawn by the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 NextLast modified: May 25, 2011