118 T.C. No. 14
UNITED STATES TAX COURT
CHRISTINE M. HACKL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
ALBERT J. HACKL, SR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 6921-00, 6922-00. Filed March 27, 2002.
In 1995 and 1996, Ps A and C made gifts to their
children and grandchildren of membership units in
Treeco, LLC, a limited liability company. Treeco had
previously been organized by A to hold and operate tree
farming properties. This timberland had been purchased
by A to provide investment diversification in the form
of long-term growth and future income. Treeco was
governed by an Operating Agreement which set forth the
rights and duties conferred on members and the manager
and which designated A as manager. At the time of the
gifts, it was correctly anticipated that Treeco and its
successor entities would generate losses and make no
distributions for a number of years.
Held: The gifts of Treeco units made by Ps fail
to qualify for the annual gift tax exclusion provided
in sec. 2503(b), I.R.C.
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