Jack J. Grynberg - Page 15




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          Italian Government would seize her assets following her marriage               
          to an Italian citizen, she created the trust to protect her                    
          property against confiscation.  On a Federal gift tax return, she              
          reported as a gift the value of the assets transferred less a                  
          retained life estate.  The Commissioner determined that she made               
          a gift of the entire trust fund since she reserved only an                     
          expectancy of income.  We rejected the latter contention and held              
          that the taxpayer properly deducted the value of a life estate                 
          because, under State law, her creditors could reach the maximum                
          amount of the trust income.  Reasoning that the taxpayer could                 
          borrow money and then relegate her creditors to the trust for                  
          repayment, we noted that she “[obtained] the enjoyment and                     
          economic benefit of the full amount of the trust income.”  Id. at              
          187.                                                                           
               The facts in this case require a similar conclusion.  Under               
          State law, the Danzig claimants had several options to recover                 
          the assets transferred.  As their form of relief, they sought a                
          money judgment against the transferee, permitting them to reach                
          the mineral interests.  Thus, like the taxpayer in Paolozzi v.                 
          Commissioner, supra, petitioner continued to enjoy those                       
          interests by forcing his creditors to look to the donee for                    
          settlement of their claims.  In these circumstances, it is                     
          apparent that petitioner did not surrender such dominion and                   
          control over the properties as to result in taxable gifts.                     






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