- 9 -
certificates were given to large corporate customers and
therefore were not gifts “made directly or indirectly to any
individual”. Hence, in petitioners’ view, these expenses do not
come under the restrictions of section 274(b).
Conversely, respondent asserts that the certificates were
given indirectly to individuals within the meaning of the statute
and regulations promulgated thereunder. According to respondent,
it is reasonable to surmise from the facts presented that
petitioners intended and were aware that particular individuals
would be the beneficiaries of the gift certificates.
Before examining the parties’ respective arguments, we pause
to note that respondent has labeled these expenditures as
“gifts”, and petitioners have not challenged whether they in fact
represent an “item excludable from gross income of the recipient
under section 102”. Sec. 274(b)(1). However, as a leading
commentator has observed:
Normally, a transfer is a gift for purposes of �
102 only if it proceeds from detached and disinterested
generosity. Section 274(b) is mostly concerned with
transfers that arise from motivations having to do more
with business advantage than generosity, which are
excluded from the recipient’s gross income under an
unverbalized extension of the meaning of “gift,”
covering gratuitous transfers of items of small value.
* * * [1 Bittker & Lokken, Federal Taxation of Income,
Estates, and Gifts, par. 21.3, at 21-52 (3d ed.
1999)(fn. ref. omitted); see also Commissioner v.
Duberstein, 363 U.S. 278 (1960).]
Thus, while the reach of section 102 in a business context
appears to be less than fully articulated, we decline to address
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011