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after the transfer.
Moreover, the phrase “adequate and full consideration” has
the same meaning in both gift and estate tax cases, Merrill v.
Fahs, 324 U.S. 308, 309-311 (1945); Estate of Friedman v.
Commissioner, 40 T.C. 714, 718-719 (1963), and this Court has
previously applied such a valuation approach in a gift tax case,
Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121, arising
under section 2512(b) from a transfer of property to a
corporation upon its formation.2 In Estate of Trenchard, the
decedents (husband and wife), their daughter, and her three
children (the six of whom are collectively referred to as the
subscribers) each transferred property to a newly formed
corporation in exchange for debt and stock; the decedents’
daughter and her three children were the only ones who received
common stock. The Court determined that the fair market value of
2 As is true in sec. 2036(a), sec. 2512(b) refers to “value”
and “adequate and full consideration in money or money’s worth”.
Specifically, sec. 2512(b) provides:
SEC. 2512. VALUATION OF GIFTS.
* * * * * * *
(b) Where property is transferred for
less than an adequate and full consideration
in money or money’s worth, then the amount by
which the value of the property exceeded the
value of the consideration shall be deemed a
gift, and shall be included in computing the
amount of gifts made during the calendar
year.
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