- 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 NextLast modified: May 25, 2011