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meaning of ordinary speech, the Treasury Regulations
make clear that no genuine business transaction comes
within the purport of the gift tax by excluding “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).” Treas. Reg. 79 (1936 ed.) Art. 8. Thus on
finding that a transfer in the circumstances of a
particular case is not made in the ordinary course of
business, the transfer becomes subject to the gift tax
to the extent that it is not made “for an adequate and
full consideration in money or money’s worth.” See 2
Paul, Federal Estate and Gift Taxation (1942) p. 1113.
[Commissioner v. Wemyss, 324 U.S. 303, 306 (1945); fn.
ref. omitted; emphasis added.]
In light of what the Supreme Court said, the estate
attempted to portray the transfer of property to the partnership
as a business transaction. The majority soundly rejects this as
a masquerade. Indeed, it is clear that the transfer was made to
reduce the value of decedent’s assets for estate tax purposes,
while at the same time allowing the full value of decedent’s
property to pass to his children.
The Supreme Court has described the objective of the gift
tax as follows:
The section taxing as gifts transfers that are not made
for “adequate and full [money] consideration” aims to
reach those transfers which are withdrawn from the
donor’s estate. * * * [Commissioner v. Wemyss, supra at
307.]
Under the applicable gift tax provisions and Supreme Court
precedent, it is unnecessary to consider what decedent’s children
received on the date of the transfer in order to determine the
value of the deemed gift under section 2512(b). Indeed, it is
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