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Respondent’s gift tax argument is supported by the
applicable statutes, regulations, and controlling opinions. If
the value of the property that decedent transferred to the
partnership was more than the value of the consideration that he
received, and the transfer was not made for bona fide nontax
business reasons, then the amount by which the value of the
property transferred exceeds the value of the consideration is
deemed to be a gift pursuant to section 2512(b).
Section 2512(b) provides:
SEC. 2512. VALUATION OF GIFTS.
(b) Where property is transferred for less than an
adequate and full consideration in money or money’s
worth, then the amount by which the value of the
property exceeded the value of the consideration shall
be deemed a gift, and shall be included in computing
the amount of gifts made during the calendar year.
Section 25.2512-8, Gift Tax Regs., provides:
Sec. 25.2512-8. Transfers for insufficient
consideration.--Transfers reached by the gift tax are
not confined to those only which, being without a
valuable consideration, accord with the common law
concept of gifts, but embrace as well sales, exchanges,
and other dispositions of property for a consideration
to the extent that the value of the property
transferred by the donor exceeds the value in money or
money’s worth of the consideration given therefor.
* * *
1(...continued)
the transfer? Certainly, a hypothetical willing buyer and seller
with reasonable knowledge of the relevant facts would be aware
that decedent’s property interests included control over the
assets. The majority’s analysis fails to adequately explain this
apparent anomaly.
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