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her petition was filed with this Court.
At the outset, we note that the record in this case leaves
much to be desired. Nevertheless, we have carefully reviewed the
evidence and done our best to make an appropriate disposition of
the case.
A. Petitioner’s Practice of Deducting Gifts to Family Members
On her income tax returns for 1988 through 1995, petitioner
deducted gifts that she made to various individuals, most if not
all of whom were family members. These deductions served to
reduce petitioner’s taxable income and generate tax refunds for
those years.
Petitioner admits that her practice of deducting gifts to
family members on her income tax returns was contrary to law.
See sec. 170(c). Petitioner professes that she was motivated to
do so by the desire to reduce the estate tax upon her death, see
sec. 2001(a), and through a misunderstanding of the $10,000
annual exclusion for gift tax purposes, see sec. 2503(b).4
Petitioner reckons that her practice of deducting gifts to
family members on her income tax returns generated erroneous
income tax refunds for 1988 through 1992 in the following
amounts:
4 For gift tax purposes, sec. 2503(b) allows a donor to
exclude from taxable gifts the first $10,000 of gifts of present
interests made to each donee during the taxable year.
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