- 12 -
beneficiary. The taxpayer then transferred shares of stock that
he owned directly to the foundation so that it held 80 percent of
the issued and outstanding shares of the corporation. Finally,
the board of directors and the shareholders of the corporation
approved the redemption of the foundation’s stock in exchange for
the operating assets of the college.
The Commissioner argued that there was an anticipatory
assignment of the proceeds of the redemption. We disagreed and
held that neither the anticipatory assignment of income doctrine
nor the step transaction doctrine was applicable. Id. at 693.
We noted that “Even though the donor anticipated or was aware
that the redemption was imminent, the presence of an actual gift
and the absence of an obligation to have the stock redeemed have
been sufficient to give such gifts independent significance.”
Id. (citing Carrington v. Commissioner, supra; DeWitt v. United
States, 503 F.2d 1406 (Ct. Cl. 1974); and Sheppard v. United
States, 176 Ct. Cl. 244, 361 F.2d 972 (1966)). We held:
When the foundation received the gift of stock from the
petitioner, no vote for the redemption had yet been
taken. Although we recognize that the vote was
anticipated, nonetheless, under the Hudspeth reasoning,
that expectation is not enough. We have found that the
foundation was not a sham, was not an alter ego of the
petitioner, and that it received his entire interest in
the 238 shares of the corporation stock. On the same
day, it acquired enough shares of stock from the trust
to hold in the aggregate 80 percent of the outstanding
shares of the corporation. Thereafter, the foundation
voted for the redemption. It did so because the
redemption was in its interest. At the time of the
gift, that vote had not yet been taken, and by the
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011