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2. Did Petitioner Make Direct Gifts to His Sons?
Petitioner deeded the leased land and bank stock to the
partnership. Whatever interests his sons acquired in this
property they obtained by virtue of their status as partners in
the partnership. Clearly, then, contrary to one of respondent’s
alternative arguments, petitioner did not make direct gifts of
these properties to his sons. Cf. LeFrak v. Commissioner, supra
(transfer by donor-father of buildings to himself and his
children as tenants in common, “d.b.a.” (doing business as) one
of various partnerships formed later the same day to hold the
particular building conveyed, represented direct gifts to the
children of the father’s interest in the buildings).
3. Did Petitioner Make Indirect Gifts to His Sons?
A gift may be direct or indirect. See sec. 25.2511-1(a),
Gift Tax Regs. The regulations provide the following example of
a transfer that results in an indirect taxable gift, assuming
that the transfer is not made for adequate and full
consideration: “A transfer of property by B to a corporation
generally represents gifts by B to the other individual
shareholders of the corporation to the extent of their
10(...continued)
Bittker & Lokken, Federal Taxation of Income, Estates and Gifts,
par. 120.1.3, at 120-6 (2d ed. 1993) (the transfer of property at
death is “a sufficient condition–-but not a necessary one–-for a
constitutional tax. By holding that a tax on a transfer at death
is not a direct tax, the Court did not imply that a tax on
something other than a transfer at death is a direct tax”).
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