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149 (donor’s gift of minority stock interests to shareholders
followed by a redemption of donor’s remaining shares treated as
single transfer of a controlling interest); Estate of Murphy v.
Commissioner, supra (decedent’s inter vivos transfer of a
minority interest followed by a testamentary transfer of her
remaining shares treated as an integrated plan to transfer
control to decedent’s children); Griffin v. United States, 42 F.
Supp. 2d 700 (W.D. Tex. 1998) (transfer of 45 percent of donor’s
stock to donor’s spouse followed by a transfer by spouse and
donor of all their stock to a trust for the benefit of their
child treated as one gift by donor of the entire block).2
The reciprocal trust doctrine, another application of
substance over form, has been used in the estate and gift tax
area to determine who is the transferor of property for the
purposes of inclusion in the gross estate. See United States v.
Grace, 395 U.S. 316, 321 (1969) (applying the reciprocal trust
doctrine in the estate tax context to identify the grantor, and
quoting with approval Lehman v. Commissioner, 109 F.2d 99, 100
(2d Cir. 1940): “The law searches out the reality and is not
concerned with the form.”). More recently, Sather v.
Commissioner, T.C. Memo. 1999-309, applied the reciprocal trust
2In Griffin v. United States, 42 F.Supp. 2d 700, 706 n.4
(W.D. Tex. 1998), the court distinguished Estate of Frank v.
Commissioner, T.C. Memo. 1995-132, where this Court declined to
integrate the steps of the transaction.
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