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property, the value of the property on the date of the gift is
considered the amount of the gift. In determining the amount of
“taxable gifts” for any particular year, a donor is entitled to
deduct the amount of gifts made during the year that qualify for
the charitable contribution deduction provided for in section
2522. Sec. 2503(a).
Section 2502(c) provides that the donor is the person liable
for the payment of the gift tax. If a donor makes a gift subject
to the condition that the donee pay the resulting gift tax, the
amount of the gift is reduced by the amount of such gift tax.
Rev. Rul. 75-72, 1975-1 C.B. 310. Such a gift is commonly
referred to as a “net gift” (net gift).
Under section 2035(c) (current section 2035(b)), a
decedent’s gross estate is increased by the amount of any gift
tax paid by the decedent or his estate on any gift made by the
decedent during the 3-year period preceding the decedent’s death.
For purposes of this “gross-up” provision, gift tax “paid by the
decedent or his estate” on gifts made during the relevant 3-year
period is deemed to include gift tax attributable to net gifts
made by the decedent during such period (i.e., even though the
donees are responsible for paying the gift tax in such
situation). Estate of Sachs v. Commissioner, 88 T.C. 769, 777-
778 (1987), affd. in part and revd. in part on another ground
856 F.2d 1158, 1164 (8th Cir. 1988).
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