Gerald A. and Henrietta V. Rauenhorst - Page 20




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                    both Grove and Carrington as support for its                      
                    position; what we have said above indicates our                   
                    belief that this Ruling reads too much into those                 
                    decisions.  Where there is, as here, an                           
                    expectation on the part of the donor that is                      
                    reasonable, with an advance understanding that the                
                    donee charity will purchase the asset with the                    
                    proceeds of the donated stock, the transaction                    
                    will be looked at as a unitary one.  A wooden view                
                    that would require legal enforceability of an                     
                    understanding or obligation to purchase the asset                 
                    contemplated to be donated ab initio is not what                  
                    the tax law contemplates.  At least, this circuit                 
                    will not take it to do so.  Judgment affirmed.                    
          Respondent’s quotation from the Blake7 opinion makes his position           
          patently clear.  Respondent is disavowing Rev. Rul. 78-197,                 
          supra, in this case.  When respondent’s arguments are boiled down           
          to their essential elements, he argues against the validity of              
          the bright-line test of Rev. Rul. 78-197, supra.                            
               The Commissioner has neither revoked nor modified Rev. Rul.            
          78-197, supra, in response to the comments in Blake.  Indeed, the           
          Commissioner has continued to rely on Rev. Rul. 78-197, supra, in           
          issuing his private letter rulings.  See, e.g., Priv. Ltr. Rul.             





               7The Court of Appeals for the Second Circuit in Blake v.               
          Commissioner, 697 F.2d 473 (2d Cir. 1982), affirmed our decision            
          in T.C. Memo. 1981-579.  The above quotation from Blake could be            
          characterized as dictum.  In our Memorandum Opinion, we did not             
          discuss Rev. Rul. 78-197, 1978-1 C.B. 83.  Instead, we decided,             
          and the Court of Appeals agreed, that there was a legally                   
          enforceable obligation on the part of the donee to purchase a               
          yacht from the donor with the proceeds of a sale of transferred             
          stock.  We held that a gift of the stock had not been made to the           
          donee.                                                                      





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