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foundation was a valid gift, and the foundation was not
bound to go through with the redemption at the time it
received title to the shares.
Also see, Grove v. Commissioner, 490 F.2d 241 (2nd
Cir. 1973); Behrend v. United States, No. 72-1153,
72-1156 (4th Cir. 1972); and Carrington v.
Commissioner, 467 [sic] F.2d 704 (5th Cir. 1973).
The Service will treat the proceeds of a
redemption of stock under facts similar to those in
Palmer as income to the donor only if the donee is
legally bound, or can be compelled by the corporation,
to surrender the shares for redemption.
In Carborundum Co. v. Commissioner, 74 T.C. 730 (1980), S.C.
Johnson & Son, Inc. v. Commissioner, 63 T.C. 778 (1975), and
Palmer v. Commissioner, supra, we considered the donees’ control
over the course of disposition and the donees’ ability to reverse
a set course of disposition as significant factors in deciding
that the donors were not taxable on the donees’ subsequent
receipt of proceeds.5 However, we have indicated our reluctance
to elevate the question of donee control to a talisman for
resolving anticipatory assignment of income issues. For example,
in Allen v. Commissioner, 66 T.C. 340, 347-348 (1976), we stated
that the donee’s power to reverse the donor’s anticipated course
of disposition was “only one factor to be considered in
5See also Hudspeth v. United States, 471 F.2d 275, 279 (8th
Cir. 1972) (finding significant that “the donees here were
powerless to vitiate taxpayer’s manifest intent to liquidate or
provide them with the corporation’s assets through redemption”);
Kinsey v. Commissioner, 58 T.C. 259, 264 (1972), affd. 477 F.2d
1058 (2d Cir. 1973) (wherein we found significant the fact that
“the donee was powerless, both legally and as a practical matter,
to change the course of events already unfolding”).
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