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upon their formation. Respondent determined that the Caracci
children realized gross income by virtue of the fact that the
Sta-Home for-profit entities, in connection with their
organization, received the assets of the Sta-Home tax-exempt
entities. Respondent argues in brief that the assets of the Sta-
Home tax-exempt entities were constructively transferred to the
Caracci children who, in turn, contributed those assets to the
Sta-Home for-profit entities. Respondent argues in brief that
the constructive transfer is an accession to wealth that is
includable in the Caracci children’s gross income under section
61.
We disagree with respondent that the asset transfer resulted
in gross income to the Caracci children. Although section 61
provides broadly that gross income includes all income “from
whatever source derived”, section 102(a) generally exempts from
that provision the value of any property received by gift. When
property is transferred for less than adequate and full
consideration in money or money’s worth, the amount by which the
value of the property exceeds the value of the consideration is
deemed a gift. Sec. 2512(b); Commissioner v. Wemyss, 324 U.S.
303 (1945); Georgia Ketterman Trust v. Commissioner, 86 T.C. 91,
96 (1986); Estate of Higgins v. Commissioner, T.C. Memo. 1991-47.
In the corporate setting, such a transfer may be a gift by the
donor to the individual shareholders of the corporation to the
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