Estate of Morton B. Harper, Deceased, Michael A. Harper, Executor - Page 22

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          III.  Inclusion in the Gross Estate--Section 2036                           
               A.  General Rules                                                      
               As a general rule, section 2501 imposes a tax for each                 
          calendar year “on the transfer of property by gift” by any                  
          taxpayer, and section 2511(a) further clarifies that such tax               
          “shall apply whether the transfer is in trust or otherwise,                 
          whether the gift is direct or indirect, and whether the property            
          is real or personal, tangible or intangible”.  For purposes of              
          determining whether a gift has been made, section 2512(b)                   
          provides:  “Where property is transferred for less than an                  
          adequate and full consideration in money or money’s worth, then             
          the amount by which the value of the property exceeded the value            
          of the consideration shall be deemed a gift”.  The tax is then              
          computed based upon the statutorily defined “taxable gifts”,                
          which term is explicated in section 2503.  Section 2503(a) states           
          generally that taxable gifts means the total amount of gifts made           
          during the calendar year, less specified deductions.                        
               Similarly, the Internal Revenue Code imposes a Federal tax             
          “on the transfer of the taxable estate of every decedent who is a           
          citizen or resident of the United States.”  Sec. 2001(a).  Such             
          taxable estate, in turn, is defined as “the value of the gross              
          estate”, less applicable deductions.  Sec. 2051.  Section 2031(a)           

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