- 8 -
Bank of Commmerce, 472 U.S. 713, 722 (1985); United States v.
Mitchell, 403 U.S. 190, 197 (1971). State law creates legal
interests, while Federal law determines when and how those
interests shall be taxed. United States v. Mitchell, supra at
197. In order to make a valid gift for Federal tax purposes, a
transfer must at least effect a valid gift under the applicable
State law. See Woodbury v. Commissioner, 49 T.C. 180, 193-194
(1967).
In the case of a valid gift, the amount of an otherwise
allowable deduction for the charitable contribution of property
that would produce ordinary income if sold at its fair market
value is limited to the donor’s cost or basis in the contributed
property. Sec. 170(e)(1)(A); Chronicle Publg. Co. v.
Commissioner, 97 T.C. 445, 447-448 (1991).
We thus first consider whether petitioner owned the
materials donated such that he was capable of making a valid gift
under the law of the State of Oklahoma. In determining what the
relevant State law is, that State’s highest court is the best
authority on its own law. Commissioner v. Estate of Bosch, 387
U.S. 456, 465 (1967). Under Oklahoma law, three elements must be
present in order to effect a valid inter vivos gift: First, the
donor must possess a donative intent; second, actual delivery of
the subject matter of the gift must be completed; and, third, the
donor must strip himself of all ownership and dominion over the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: March 27, 2008