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Committee Reports can be made after death of the donor
spouse, per I.R.C. � 2513(a)(1) and I.R.C.
� 2513(b)(2), and the non-donor survivor is jointly and
severally liable for the gift tax per I.R.C. � 2513(d).
Thus, a terminally-ill person may intentionally make a
“deathbed gift” of taxable value to third parties for
tax avoidance purposes, hoping that his young and
healthy spouse (and beneficiary of the remainder of his
estate) will pay the gift taxes and thus effectively
remove the gift tax from his tax transfer base, and her
transfer tax base as well if she lives for 3 years from
the time of his gifts. By basing the inclusion under
section 2035(c) on the person who pays the gift tax and
then dies within 3 years, rather than the person who
makes the gift, Congress intentionally created a
situation where a single individual does not have
rights and protection equal to those of a married
individual.
We are unimpressed with the estate’s argument, which brings
to mind Justice Holmes’s description of an equal protection claim
as “the usual last resort of constitutional arguments”. Buck v.
Bell, 274 U.S. 200, 208 (1927). The committee report quoted
above merely describes the coordination of sections 2035(c) and
2513. The coordination of these two sections does not, in and of
itself, result in favored treatment to married donors.15 As
previously discussed, the purpose of the gross-up rule is to
reduce disparities in the taxation of lifetime and deathtime
transfers by effectively taxing gifts made within 3 years of
death on a tax-inclusive basis (rather than on the tax-exclusive
basis that normally pertains to gifts), thereby ensuring that
assets used to pay gift taxes on these gifts do not escape the
15 The estate does not argue that the gift-splitting
provisions of sec. 2513 are per se unconstitutional.
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