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consideration.3 That language has the same meaning in the
respective contexts of the gift tax and the estate tax. Estate
of Friedman v. Commissioner, 40 T.C. 714, 718-719 (1963) (“[I]f
the transfer under scrutiny is considered as made for an adequate
and full consideration for gift tax purposes, it likewise is to
be considered for estate tax purposes.”); see also Merrill v.
Fahs, 324 U.S. 308, 311 (1945) (the gift and estate taxes are in
pari materia and must be construed together). The gift-on-
account-of-insufficient-consideration rule of section 2512(b) is
construed in section 25.2512-8, Gift Tax Regs., which, in
pertinent part, provides:
SEC. 25.2512-8 Transfers for insufficient
consideration.
Transfers reached by the gift tax are not confined
to those only which, being without a valuable
consideration, accord with the common law concept of
gifts, but embrace as well sales, exchanges, and other
dispositions of property for a consideration to the
extent that the value of the property transferred by
the donor exceeds the value in money or money's worth
of the consideration given therefor. However, a sale,
exchange, or other transfer of property made in the
ordinary course of business (a transaction which is
bona fide, at arm's length, and free from any donative
3 Sec. 2512(b) provides:
SEC. 2512(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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