- 35 -
received no compensation for his duties as director, and resigned
after only 6 days. Hence, it is clear that Mr. Quay’s role, and
a transient one at that, existed on paper only. All stake in
establishing HGAMC patently came from petitioners alone.
Economic realities thus point to petitioners as the true grantors
of HGAMC.
In this connection, we further note that in situations where
one spouse first transfers his or her property to the other
spouse, who in turn transfers the received property along with
his or her own to the entity, courts typically ignore the first
conveyance when considering questions of grantor. E.g., Neely v.
United States, 775 F.2d 1092, 1095 (9th Cir. 1985); Schulz v.
Commissioner, 686 F.2d 490, 496 (7th Cir. 1982), affg. T.C. Memo.
1980-568; Kooyers v. Commissioner, T.C. Memo. 2004-281. Either
of two rationales counsels this approach. The conveyance is
ignored (1) because substance predominates over form in tax
matters and/or (2) because the parties themselves did not treat
the conveyance as either a sale or a gift. Neely v. United
States, supra at 1095; Schulz v. Commissioner, supra at 496;
Kooyers v. Commissioner, supra. Here, the record in any event
shows a scenario akin to a so-called step transaction where
Mrs. Richardson’s transfer was only the first in a series of
preplanned steps, such that intermediary maneuvers should be
ignored in favor of substance.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011