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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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