J.C. Shepherd - Page 19




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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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