- 90 -
transfer tax reduction but is the inadequacy of the cash value of
the limited partnership interest that F received in consideration
for his contribution to FLP. See sec. 25.2512-8, Gift Tax Regs.
It is precisely that debasement in value that F sought to achieve
as his means of generating the transfer tax saving, and it is
appropriate that that be the measure of his gift.
The fact that S, D, and their children may not realize the
measure of F’s gift (the difference between the inside and
outside value of F’s interest in FLP) until, by bequests, they
receive his interest is not an impediment to concluding that F
made a gift. Section 25.2511-2(a), Gift Tax Regs., provides:
Sec. 25.2511-2 Cessation of donor's dominion and
control.
(a) The gift tax is not imposed upon the receipt
of the property by the donee, nor is it necessarily
determined by the measure of enrichment resulting to
the donee from the transfer, nor is it conditioned upon
ability to identify the donee at the time of the
transfer. On the contrary, the tax is a primary and
personal liability of the donor, is an excise upon his
act of making the transfer, is measured by the value of
the property passing from the donor, and attaches
regardless of the fact that the identity of the donee
may not then be known or ascertainable.
In Commissioner v. Wemyss, 324 U.S. 303, 307 (1945), the Supreme
Court said: “The section taxing as gifts transfers that are not
made for ‘adequate and full (money) consideration’ aims to reach
those transfers which are withdrawn from the donor's estate.”
The value discounts obtained by F on the transfer to FLP withdrew
from his estate amounts that will (and are intended to) reappear
Page: Previous 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 NextLast modified: May 25, 2011