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includable in the gross estate. See id.
In general, a tax is imposed for each calendar year on the
transfer of property by gift by any individual, whether the gift
is made directly or indirectly. See secs. 2501(a), 2511(a). The
term "taxable gifts" means the total amount of gifts made during
the calendar year, less certain deductions. See sec. 2503(a).
However, the first $10,000 of gifts of a present interest in
property made by a donor to any person in a calendar year are
excluded from taxable gifts. See sec. 2503(b).
As a general rule, we respect the form of a transaction. We
do not apply the substance over form principles unless the
circumstances so warrant. See Gregory v. Helvering, 293 U.S. 465
(1935); Estate of Jalkut v. Commissioner, 96 T.C. 675, 686
(1991).
The reciprocal trust doctrine, an application of substance
over form, has been used in the estate and gift tax area to
determine who is the transferor of property for the purposes of
inclusion in the gross estate. See United States v. Estate of
Grace, 395 U.S. 316, 321 (1969). Recently, in Sather v.
Commissioner, T.C. Memo. 1999-309, this Court applied the
reciprocal trust doctrine to reduce the number of present
interest annual exclusions for gift tax purposes.
In United States v. Estate of Grace, supra, Joseph P. Grace
created a trust for the benefit of his wife and, 2 weeks later,
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