- 21 -
law were sufficient to render the gifts of present interests
within the meaning of section 2503(b). See United States v.
Pelzer, 312 U.S. at 402-403.
Moreover, we conclude that the relevant body of Federal
authority encompasses the general interpretive principles
developed through the extensive litigation involving indirect
gifts. To disregard longstanding directives that a present
interest gift exists only where a donee receives noncontingent,
independently exercisable rights of substantial economic benefit
cannot be justified in the face of either the language used by
the Supreme Court or the subsequent application of such language.
See Fondren v. Commissioner, 324 U.S. at 20-21; Ryerson v. United
States, 312 U.S. at 408; United States v. Pelzer, supra at 403-
404.
For example, in Fondren v. Commissioner, supra at 20-21, the
Court explains the meaning of future versus present interest in
general terms, stating:
it is not enough to bring the exclusion into force that
the donee has vested rights. In addition he must have
the right presently to use, possess or enjoy the
property. These terms are not words of art, like “fee”
in the law of seizin * * *, but connote the right to
substantial present economic benefit. The question is
of time, not when title vests, but when enjoyment
begins. Whatever puts the barrier of a substantial
period between the will of the beneficiary or donee now
to enjoy what has been given him and that enjoyment
makes the gift one of a future interest within the
meaning of the regulation.
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