- 46 -
doctrine to cut down the number of present interest annual
exclusions for gift tax purposes:
We must peel away the veil of cross-transfers to
seek out the economic substance of the foregoing series
of transfers. * * *
* * * * * * *
We are led to the inescapable conclusion that the
form in which the transfers were cast, i.e., gifts to
the nieces and nephews, had no purpose aside from the
tax benefits petitioners sought by way of inflating
their exclusion amounts. The substance and purpose of
the series of transfers was for each married couple to
give to their own children their Sathers stock. After
the transfers, each child was left in the same economic
position as he or she would have been in had the
parents given the stock directly to him or her. Each
niece and nephew received an identical amount of stock
from his or her aunts and uncles and was left in the
same economic position in relation to the others. This
was not a coincidence but rather was the result of a
plan among the donors to give gifts to their own
children in a form that would avoid taxes. * * *
[Sather v. Commissioner, T.C. Memo. 1999-309, 78 T.C.M.
(CCH) 456, 459-460, 1999 T.C.M. (RIA) par. 99,309, at
99-1964-99-1965.]
All this is set out most clearly in our reviewed opinion in
Bischoff v. Commissioner, 69 T.C. 32 (1977), as explained by the
Court of Appeals for the Federal Circuit in Exchange Bank & Trust
Co. v. United States, 694 F.2d 1261, 1269 (Fed. Cir. 1982):
“We agree with the majority in Bischoff and the appellee in this
action [the United States] that the reciprocal trust doctrine
merely identifies the true transferor, but the actual basis for
taxation is founded upon specific statutory authority.”
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011