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Transactions made in the ordinary course of business are exempt
from the above gift tax provisions. Thus, section 25.2512-8,
Gift Tax Regs., provides:
However, a sale, exchange, or other transfer of
property made in the ordinary course of business (a
transaction which is bona fide, at arm’s length, and
free from any donative intent), will be considered as
made for an adequate and full consideration in money or
money’s worth. * * *
The Supreme Court has described previous versions of the
gift tax statutes (section 501 imposing the tax on gifts and
section 503 which is virtually identical to present section
2512(b)) in the following terms:
Sections 501 and 503 are not disparate provisions.
Congress directed them to the same purpose, and they
should not be separated in application. Had Congress
taxed “gifts” simpliciter, it would be appropriate to
assume that the term was used in its colloquial sense,
and a search for “donative intent” would be indicated.
But Congress intended to use the term “gifts” in its
broadest and most comprehensive sense. H. Rep. No.
708, 72d Cong., 1st Sess., p.27; S. Rep. No. 665, 72d
Cong., 1st Sess., p.39; cf. Smith v. Shaughnessy, 318
U.S. 176; Robinette v. Helvering, 318 U.S. 184.
Congress chose not to require an ascertainment of what
too often is an elusive state of mind. For purposes of
the gift tax it not only dispensed with the test of
“donative intent.” It formulated a much more workable
external test, that where “property is transferred for
less than an adequate and full consideration in money
or money’s worth,” the excess in such money value
“shall, for the purpose of the tax imposed by this
title, be deemed a gift...” And Treasury Regulations
have emphasized that common law considerations were not
embodied in the gift tax.
To reinforce the evident desire of Congress to hit
all the protean arrangements which the wit of man can
devise that are not business transactions within the
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