Gerald A. and Henrietta V. Rauenhorst - Page 19




                                       - 19 -                                         
          Carrington, Rev. Rul. 78-197, supra, or other cases upon which              
          petitioners rely.  With that being said and leaving Carrington              
          and those other cases aside at this point, the bright-line test             
          of Rev. Rul. 78-197, supra, which focuses solely on the donee’s             
          control over the contributed property, stands in stark contrast             
          to the legal test and the cases upon which respondent relies and            
          which consider the donee’s control to be only a factor.                     
               We are convinced that respondent, in this case, is arguing             
          against the principles which he states in Rev. Rul. 78-197,                 
          supra.  In his memorandum in opposition to petitioners’ motion              
          for partial summary judgment at 30, respondent argues:                      
                         c.  Revenue Ruling 78-197, 1978-1 C.B. 83, is                
                    not controlling in this case.                                     
                    Revenue rulings are not binding on respondent or                  
               the courts.  Stubbs, Overbeck & Assoc., Inc. v. U.S.,                  
               445 F.2d 1142, 1147 (5th Cir. 1971).  Moreover, Rev.                   
               Rul. 78-197, 1978-1 C.B. 83, is not controlling in this                
               case for the very same reasons, stated above, that                     
               Carrington v. Commissioner is not controlling.  Indeed,                
               in Blake v. Commissioner, 697 F.2d at 480-481, the                     
               Second Circuit found that Rev. Rul. 78-197 does not                    
               apply to circumstances such as those in the present                    
               case, stating:                                                         
                         More troublesome is the case of Palmer v.                    
                    Commissioner, 62 TC 684 (1974), aff’d on other                    
                    grounds, 523 F.2d 1308 (8th Cir. 1975), which held                
                    that even an expectation of a stock redemption                    
                    would not warrant denying charitable contribution                 
                    status.  The Service, in Revenue Ruling 78-197,                   
                    1978-1, C.B. 83, acquiesced in Palmer, stating                    
                    that it would treat redemption proceeds under                     
                    facts similar to 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.”  Id.  The Service cited                   





Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011