§25 — Interest on certain home mortgages

Section 20.2107-1, Estate Tax Regs., provides that ifa nonresident expatriate decedent owns or is considered to own a certain amount ofthe voting shares in a foreign corporation at the time ofhis death, his gross estate must include an amount based upon the FMV ofhis percentage ownership interest in the foreign corporation and the portion ofthe for

1286, 1288, was superseded by Rev.

1286, 1288, was superseded by Rev.

The Court finds neither rationale persuasive and appears to overrule McCord, at least to the extent it addresses the former.

Therefore, Treasury Regulation § 25.2519-1(e) does not apply to the transactions in issue.

Pursuant to its terms, however, section 2523(a) applies in the first instance only if the donor “transfers * * * an interest in property” to his or her spouse. For the reasons discussed below, we conclude that petitioner’s actions were ineffective to transfer membership interests in the LLC to Mrs. Smaldino. Consequently, section 2523(a) is inapplicable, and we agree with respondent that in substance the Dynasty Trust received all its membership interests from petitioner.

The Landmark Law defines "exterior architecture feature" as: [t]he architectural style, design, general arrangement and components ofall ofthe outer surfaces ofan improvement, as distinguished from the interior surfaces enclosed by said exterior surfaces, including, but not limited to, the kind, color and texture ofthe building material and the type and style ofall windows, doors, lights, signs and other fixtures appurtenant to such improvement. N.Y. City Admin. Code sec. 25-302(g).

Section 2512(b) furtherprovides that "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 ofthe property exceeded the value ofthe consideration shall be deemed a gift." Thus, the gift tax does not apply to a transfer for full and adequate consideration in money or money's worth.

section 2519 deemed transfers lies with the trustees of residual trusts A and B, section 2035 (b) does not apply .

Unlike section 2512(b), section 2503(b) focuses on the identity of the donee.

18 We express no view on whether the other beneficiaries of the Marital Trust could be treated as making a gift to Sally for gift tax purposes.

Because we decide this case on the preponderance ofthe evidence, we need not decide which party has the burden ofproof.

Accordingly, we need not decide whether the general rule of sec.

We need not decide petitioners’ contention because our findings and analysis on that issue do not depend on which party bears the burden of proof.

Respondent acknowledges that Kerr is applicable to this issue but argues that Kerr was incorrectly decided.

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 mon

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 mon

We hold, rather, that for purposes of section 6201(d) the Commissioner has not “produc[ed] reasonable and probative information .

Pursuant to section 2512(a), “[i]f the gift is made in property, the value thereof at the date of the gift shall be considered the amount of the gift.” Section 2512(b) provides: 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

- 44 - conditioning unit, or $1,875, but that the amount is limited to $1,500 pursuant to section 25C(b).

We hold, on the basis oftheir deemed admissions, that petitioners are not entitled to the American Opportunity Credit for any ofthe tax years at issue.

We hold that petitioner is not entitled to the American Opportunity Tax Credit for 2011, and we thus sustain respondent's disallowance ofthis credit.

Purdue (decedent) to the Purdue Family LLC (PFLLC) is includible in the value ofher gross estate under sections 2036(a) and 2035(a).¹ We hold that it is not; (2) whether decedent's gifts ofPFLLC interests from 2001 through 2007 to the Purdue Family Trust (PFT) are present interest gifts which qualify for exclusion under section 2503(b).

Purdue (decedent) to the Purdue Family LLC (PFLLC) is includible in the value ofher gross estate under sections 2036(a) and 2035(a).¹ We hold that it is not; (2) whether decedent's gifts ofPFLLC interests from 2001 through 2007 to the Purdue Family Trust (PFT) are present interest gifts which qualify for exclusion under section 2503(b).

Pursuant to section 25.2512-1, Gift Tax Regs., fair market value is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.

In view ofthe foregoing, we hold that petitioner is not entitled to an earned income credit.

Richards is liable for the 10% additional tax on early distributions from qualified retirement plans, pursuant to section 72(t) (we hold that he is); (2) whether he is entitled to education credits against tax for "qualified tuition and related expenses", pursuant to section 25A (we.hold that he is not); and (3) whether we havejurisdiction over his claim that "I never received any ofthe funds that the IRS claims they sent me" (we hold that we do not).

On appeal, the Commissionerargued onlythat the taxpayers were not entitled to a charitable contribution deduction for any additional.units transferred to the charities pursuant to section 25.2522(c)-3(b)(1), Gift Tax Regs., which provides that no deduction is allowed ifa transfer "is dependentupon the performance ofsome act or ofthe happening ofa precedent event in order that [the transfer] might become effective".

Accordingly, we hold that Mr .

Accordingly, we hold that petitioners are not entitled to a student loan interest deduction in 2002 .

We hold that - 6 - respondent's determination disallowing petitioner's claimed charitable contribution deductions is sustained .

Petitioner also claimed an earned income credit with KH as the qualifying child, a child tax credit with KH as the qualifying child, and a Hope Scholarship Credit pursuant to section 25A.3 Additionally, petitioner reported wage income of $25,813 and an adjusted gross income of $25,813.

- 98 - Accordingly, pursuant to section 2501, the entire $9,883,832 transfer is subject to gift tax, and a charitable deduction is allowed for the $2,972,899 (i.e., $9,883,832 - $6,910,933) transferred to or for the use of the Symphony and CFT.

Petitioners reported the 1995 gifts of Treeco units on timely filed gift tax returns and elected on those returns to treat the gifts as made one-half by each of the - 10 - petitioners pursuant to section 2513.

Pursuant to section 2512, the value of the transferred property as of the date of the gift "shall be considered the amount of the gift".

Pursuant to section 2512, the value of the transferred property as of the date of the gift “shall be considered the amount of the gift”.

Section 2512 provides that if a gift is made in property, “the value thereof at the date of the gift shall be considered the amount of the gift.” - 21 - Pursuant to section 25.2512-1, Gift Tax Regs., the value of the gift is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts.

tion in section 267(d) and the loss deferral provisions of subsection (f) in that they both prevent an immediate loss deduction to the seller and accrue the loss either in terms of a limited gain recognition to the purchaser pursuant to section 267(d) or as a deferral of the tax benefit of the loss pursuant to section 25Sec.

Section 25A authorizes education tax credits, including the Lifetime Learning Credit (prescribed in subsection (c)) and the American Opportunity Credit (prescribed in subsection (i)), the latter representing a modified version of the Hope Scholarship Credit prescribed in subsection (b).¹³ The tax credits are available to taxpayers who pay qualified

American Opportunity Credit For tax year 2011, section 25A provided a variety oftax credits for qualified tuition and related expenses for postsecondary education, including the American Opportunity Credit. See Terrell v. Commissioner, T.C. Memo. 2016-85. Section 25A(f)(1)(A) defines the term "qualified tuition and related expenses" to include tuition and fees for the taxpayer, his spouse, or any dependent ofthe taxpayerwith respect to whom the taxpayer is allowed a deduction under section 151.

ofgifts, but embrace as well sales, exchanges, and other dispositions ofproperty for a consideration to the extent that the value ofthe propertytransferred by the donor exceeds the value in money or money's worth ofthe consideration given therefor." Sec. 25.2512-8, Gift Tax - 20 - [*20] Regs. Section 2512(b) furtherprovides that "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 ofthe property exceeded the

Section 25.2512-2, Gift Tax Regs., deals with the valuation of stocks and bonds for purposes of the gift tax. See sec. 25.2512-2(a), Gift Tax Regs. In pertinent part, section 25.2512-2(b)(1), Gift Tax Regs., provides: "In general, if there is a market for stocks * * *, on a stock exchange, in an over-the-counter market or otherwise, the mean between the highest and lowest quoted selling prices on the date of the gift is the fair market value per share". Petitioners argue that, because the gifts

allowable with respect to the computer simulator “TG&C is an S-corporation, [and] the simulation equipment, which was a gift for [sic] the company, represents a gift to its stockholders.” As support for petition- ers’ position, petitioners point to section 25.2511-1(c)(1) and (g)(1), Gift Tax Regs.5 Petitioners’ reliance on those regula- 4Petitioners do not contend, and the record does not estab- lish, that for each of the taxable years at issue they had any basis in any indebtedness of TGC to

25.2511-2(a), Gift Tax Regs. The value of property transferred at the date of gift is considered to be the amount of the gift. See sec. 2512(a); sec. 25.2512-1, Gift Tax Regs. The value of property for gift tax purposes is determined in the same manner as for estate tax purposes, see supra p. 60, by applying the hypothetical willing buyer and

25.2511-2(a), Gift Tax Regs. The value of property transferred at the date of gift is considered to be the amount of the gift. See sec. 2512(a); sec. 25.2512-1, Gift Tax Regs. The value of property for gift tax purposes is determined in the same manner as for estate tax purposes, see supra p. 60, by applying the hypothetical willing buyer and

Instead, as provided by section 25.2518-1(b), Gift Tax Regs., the interest is considered as passing directly to the persons entitled to receive the property as a result of the disclaimer.

25.2512-8, Gift Tax Regs. Petitioner alternatively argues that even if no bona fide farm partnership existed, decedent still made no gifts of the investment income because most or all of the income was spent on decedent's share of the family farm's expenses. Petitioner further asserts that decedent received full consideration for any income no

(4) Whether the private annuity transaction qualifies as a transaction in the ordinary course of business under section 25.2512-8, Gift Tax Regs.

the exchange. The amount of any such excess, by augmenting the value of Robert's common stock in FIC, would be a taxable gift from decedents to Robert. See Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121 supplemented by T.C. Memo. 1995-232; sec. 25.2511-1(h)(1), Gift Tax Regs. Valuation is a question of fact, and the trier of fact must weigh all relevant evidence to draw the appropriate inferences. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (1944); Helvering v. Nationa

Section 25-1-61 of the Mississippi Code provides that State officers who must remove themselves to another county for official purposes will be deemed to maintain their home residence, unless they choose to establish a new residence in the county where they are performing their official duties. Miss. Code Ann. sec. 25-1-61 - 14 - (1972).2 Section

1(a) provides the general rule that Federal gift tax will be imposed upon the value of property transferred by gift during each calendar year. The value of a gift of stock is the stock’s fair market value on the date the gift is made. Sec. 2512(a); sec. 25.2512-2(a), Gift Tax Regs. Fair market value is defined generally as the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasona

t the terms of the agreement be comparable to those of similar arrangements negotiated at arm’s length. Sec. 2703(b). Section 2703 applies to agreements created or substantially modified after October 8, 1990. OBRA sec. 11602(e), 104 Stat. 1388-500; sec. 25.2703-2, Gift Tax Regs. As the legislative history makes clear, section 2703 was intended to supplement, not supplant, the existing legal requirements: “The bill does not otherwise alter the requirements for giving weight to a buy-sell agreeme

25.2512-5A(e), Gift Tax Regs. However, if the gift in trust is to a family member (as defined in section 2704(c)(2)), the value of the gift is determined subject to the limitations of section 2702. - 6 - Section 2702 provides: SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN TRUSTS. (a) Valuation Rules.-- (1) In general

is made in the ordinary course of business (i.e., is bona fide, at arm's length, and without donative intent), even if the transfer is for less than adequate and full consideration. Estate of Anderson v. -12- Commissioner, 8 T.C. 706, 720 (1947); sec. 25.2512-8, Gift Tax Regs.4 Decedent's estate bears the burden of proving that decedent's transfers to petitioner of undivided interests in timberland in 1980 and 1983 were not taxable gifts. Rule 142(a). Petitioners argue that decedent had good bu

25.2512-8, Gift Tax Regs.; see also Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121. As stated by the Supreme Court, the "Congress intended to use the term 'gifts' in its broadest and most comprehensive sense" and "dispensed with the test of 'donative intent'" in lieu of "a much more workable external test, that where 'property is tra

Respondent reasons that since the evidence shows that no consideration was given by Patricia Low for the cancellation of the debt, the amount of the gift must equal the debt, citing section 25.2512-8, Gift Tax Regs.

25.2702-7, Gift Tax Regs., as amended by T.D. 9181, supra. -3- are to be disregarded if they are not qualified interests, and such disregard makes each annuity one for its set term of years. We hold that the GRATs do not create annuities for their stated term of years. Background 1. Preface All facts were set forth in stipulations or containe

25.2503-3, Gift Tax Regs.] - 16 - III. Caselaw Development The foregoing statutory and regulatory pronouncements have been the subject of repeated interpretation by the Federal courts. Much of the litigation has occurred in the factual context of gifts in trust, including a series of seminal decisions by the Supreme Court in the 1940s. Commis

) imposes a tax on the “transfer of property by gift”. This gift tax applies “whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible”. Sec. 2511(a); sec. 25.2511-1(a), Gift Tax Regs. The terms “transfer * * * by gift” and “indirect” are designed to encompass all transfers whereby, and to the extent that, property or a property right is gratuitously passed to or conferred upon another, regardless

) imposes a tax on the “transfer of property by gift”. This gift tax applies “whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible”. Sec. 2511(a); sec. 25.2511-1(a), Gift Tax Regs. The terms “transfer * * * by gift” and “indirect” are designed to encompass all transfers whereby, and to the extent that, property or a property right is gratuitously passed to or conferred upon another, regardless

) imposes a tax on the “transfer of property by gift”. This gift tax applies “whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible”. Sec. 2511(a); sec. 25.2511-1(a), Gift Tax Regs. The terms “transfer * * * by gift” and “indirect” are designed to encompass all transfers whereby, and to the extent that, property or a property right is gratuitously passed to or conferred upon another, regardless

) imposes a tax on the “transfer of property by gift”. This gift tax applies “whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible”. Sec. 2511(a); sec. 25.2511-1(a), Gift Tax Regs. The terms “transfer * * * by gift” and “indirect” are designed to encompass all transfers whereby, and to the extent that, property or a property right is gratuitously passed to or conferred upon another, regardless

25.2511-2(b), Gift Tax Regs. To evaluate whether a gift has been completed, we look to the “objective facts of the transfer and the circumstances under which it [the gift] is made”. Sec. 25.2511-1(g)(1), Gift Tax Regs. In the instant case, there is no indication that any steps were taken toward delivery of the gifts or the cessation of dominio

rket value of voting rights in the Company, prior to the exchange on May 25, 1990, as part of a 25 percent voting interest with no equity attached to such interest was $60.00." In the alternative, petitioner argues that if the gifts made through the decedent's participation in the - 21 - recapitalization are to be valued under section 2512(b) and section 25.2511-1(h)(1), Gift Tax Regs., as respondent argues, then respondent's valuation is still wrong.

rket value of voting rights in the Company, prior to the exchange on May 25, 1990, as part of a 25 percent voting interest with no equity attached to such interest was $60.00." - 20 - In the alternative, petitioner argues that if the gifts made through the decedent's participation in the recapitalization are to be valued under section 2512(b) and section 25.2511-1(h)(1), Gift Tax Regs., as respondent argues, then respondent's valuation is still wrong.

25.2511-2(b), Gift Tax Regs. The gift tax is not applicable to a transfer of bare legal title, but only to a transfer of a beneficial interest in property. Sec. 25.2511- 1(g)(1), Gift Tax Regs. Any gift in which the donor reserves the right to revest the beneficial title in himself is incomplete. -13- Sec. 25.2511-2(c), Gift Tax Regs. Thus, f

imer is determined to have been made by the surviving spouse, then for purposes of subtitle B--dealing with estate and gift taxes--the property interest disclaimed is treated as if it had never been transferred to the surviving spouse. Sec. 2518(a); sec. 25.2518-1(b), Gift Tax Regs.; see - 7 - generally H. Rept. 94-1380, at 65-68 (1976), 1976-3 (Vol. 3) C.B. 738, 799-802.5 A qualified disclaimer requires an irrevocable and unqualified refusal by a person to accept an interest in property. Sec. 2

Section 25.2511-1(g)(1), Gift Tax Regs., provides in pertinent part: Donative intent on the part of the transferor is not an essential element in the application of the gift tax to the transfer. The application of the tax is based on the objective facts of the transfer and the circumstan- ces under which it is made, rather than on the subjec- tive

In particular, respondent determined that petitioner: (1) Understated the value of the assets that were the subject of the private annuity agreement; and (2) erred in relying on section 25.2512-5(f) (Table A), Gift Tax Regs., to compute the value of the remainder interest transferred pursuant to the private annuity agreement.

§ 25.2512-1; see also Rev. Rul. 59-60, 1959-1 C.B. 237. In general, “property is valued as of the valuation date on the basis of market conditions and facts available on that date without regard to hindsight.” Estate of Gilford v. Commissioner, 88 T.C. 38, 52 (1987). Subsequent events are not considered in fixing fair market value, except to the ex

955, 970 & n.20 (1983) (citing Restatement (Second) of Contracts § 25 and other authorities), aff’d, 765 F.2d 643 (7th Cir.

§ 25.2703-1(b)(4)(i). “A right or restriction is considered a fair bargain among unrelated parties in the same business if it conforms with the general practice of unrelated parties under negotiated agreements in the same business.” Id. This determination will generally entail consideration of the following factors: (1) the expected term of the agr

The amount of tax imposed is based on the value of the property transferred on the date the gift is complete.6 I.R.C. § 2512(a); Treas. Reg. § 25.2511-2(a). The gift tax applies to a transfer regardless of whether the gift is direct or indirect, whether the property is real or personal, whether the property is tangible or intangi

9 [*9] “Donative intent on the part of the transferor is not an essential element in the application of the gift tax to the transfer.” Treas. Reg. § 25.2511-1(g)(1). “The application of the tax is based on the objective facts of the transfer and the circumstances under which it is made, rather than on the subjective motives of the don

§ 25.2512-1; see also Rev. Rul. 59-60, 1959-1. C.B. 237. The willing buyer and the willing seller are hypothetical persons rather than specific individuals or entities, and the characteristics of these hypothetical persons are not necessarily the same as the personal characteristics of the actual seller or a particular buyer. Estate of Newhouse v.

“Qualified tuition and related expenses” include tuition and fees at an eligible educational institution that the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent attends, as well as course materials. § 25A(f)(1)(A), (D). Up to 40% of the credit may be refundable. § 25A(i). The credit is allowed for the first four years of

Levine placed her Dayton Park project partnership—located in Dayton, Minnesota—into the GRAT with a two- year term, with any appreciation on the asset to pass to Nancy and Robert at the end of this term. A QPRT allows an individual to transfer her home into a trust, which makes it exempt from estate and gift taxes so long as the

Treasury Regulation § 25.2511-2(b) provides that a gift is not considered complete until a donor has “parted with dominion and control as to leave him no power to change its disposition.” For purposes of this regulation, we must look to the relevant state law to determine when a decedent parts with dominion and control of the funds in their accou

v. Commissioner, 83 T.C.M. (CCH) 1524, 1528 (2002); Estate of Salsbury v. Commissioner, 34 T.C.M. (CCH) 1441, 1451-52 (1975). And the regulations tells us that the degree of control is relevant to valuation. See sec. 20.2031-2(e), Estate Tax Regs.; sec. 25.2512-2(e) and (f), Gift Tax Regs. As stated in Revenue Ruling 59-60, sec. 4.02(g), 1959-1 C.B. 237, 242, “[t]he size of the block of stock itself is a relevant factor to be considered * * * [and] may justify a higher value for a specific bloc

idering the entire record.19 After we determine the value of the gross property, that value may increase or decrease if premiums or discounts apply.20 15Sec. 2502(a), (c). 16Sec. 2512(a). 17Secs. 2031(a), 2032. 18Sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973). 19Estate of Stevens v. Commissioner, T.C. Memo. 2000-53, 79 T.C.M. (CCH) 1519, 1521 (2000); Estate of Hinz v. Commissioner, T.C. Memo. 2000-6, 79 T.C.M. (

exception, the restriction must be part of a bona fide business arrangement, not a device to transfer property at less than adequate and full consideration, and for terms comparable to similar arrangements entered into at arm’s length. Sec. 2703(b); sec. 25.2703-1(b)(4), Gift Tax Regs. 1. Bona Fide Business Arrangement A bona fide business arrangement is not defined in the Code or the regulations. Sec. 2703(b)(1). We have held that a restrictive arrangement must further some business purpose. Am

The American Opportunity Tax Credit provides for a credit against tax equal to 100% of qualified tuition and related expenses paid by a taxpayer during the taxable year up to $2,000, plus 25% of such expenses paid that exceed $2,000 but do not exceed $4,000, allowing for a maximum credit of $2,500. Sec. 25A(i)(1). Up to 40% of the cred

A taxpayermay claim a credit for qualified tuition and related expenses paid with proceeds from a student loan, even ifthose proceeds are paid by the lender directly to the educational institution on the student's behalf. See sec. 1.25A-5(b)(1), Income Tax Regs.; see also Terrell v. Commissioner, T.C. Memo. 2016-85. Loan proceeds disbu

25.2511-1(g)(1), Gift Tax Regs. The regulations define a transfer in the ordinary course ofbusiness as "a transaction which is bona fide, at arm's length, and free from any donative intent". Sec. 25.2512-8, Gift Tax Regs.; see Weller v. Commissioner, 38 T.C. 790, 805-806 (1962). A transaction meeting this standard "will be considered as made f

02 and its corresponding regulations, where property is transferred in trust with the donor retaining an interest in the property, the value ofthe gift is the value ofthe property transferred, less the value ofthe donor's retained interest. See also sec. 25.2702-1, Gift Tax Regs. - 7 - [*7] III. Angus Angus was formed as an LLC under the laws ofDelaware on August 13, 2012.5 At its inception Angus had two members: PMG and Florence. On September 7, 2012, PMG contributed $200 and Florence contribut

A taxpayermay claim a credit for qualified tuition and related expenses paid with proceeds from a student loan, even ifthose proceeds are paid by the lender directly to the educational institution on the student's behalf. See sec. 1.25A-5(b)(1), Income Tax Regs.; see also Terrell v. Commissioner, T.C. Memo. 2016-85. Loan proceeds disbu

25.2511-1(g)(1), Gift Tax Regs. The regulations define a transfer in the ordinary course ofbusiness as "a transaction which is bona fide, at arm's length, and free from any donative intent". Sec. 25.2512-8, Gift Tax Regs.; see Weller v. Commissioner, 38 T.C. 790, 805-806 (1962). A transaction meeting this standard "will be considered as made f

Regarding the education credit under section 25A(a) at issue for 2014, petitioner must establish the payment oftuition in 2014 to qualify for the credit.

- 28 - [*28] The only other Treasury regulation that uses "proportionate value" is section 25.2515-1(d)(2)(ii), Gift Tax Regs., which deals with the effect ofan exchange of real property held by tenants in common.

Petitioners failed to substantiate a qualified tuition and related expense. Petitioners produced a document which notified petitioner husband that his payment to the University ofTulsa had been returned because ofinsufficient funds. Respondent's disallowance ofthis deduction is sustained. V. Head ofHousehold Section 1(b) provides a

property during the years in issue; (2) entitled to various deductions claimed on Schedules C, Profit or Loss From Business, for certain expenses related to a foster care business in excess ofamounts allowed by respondent; (3) entitled to certain dependency exemption deductions claimed on their 2012 return; (4) entitled to education credits under section 25A for 2013; and (5) liable for a section 6662(a) accuracy-related penalty for either year in issue.

25.2503-1, Gift Tax Regs. The value ofa gift ofproperty is determined as ofthe date it is given. Sec. 2512(a). The fair market value ofproperty transferred as a gift is the price at which it would change hands between a willing buyer and a willing seller, neither under any compulsion to buy or sell and both having reasonable knowledge ofthe re

Petitioners failed to substantiate a qualified tuition and related expense. Petitioners produced a document which notified petitioner husband that his payment to the University ofTulsa had been returned because ofinsufficient funds. Respondent's disallowance ofthis deduction is sustained. V. Head ofHousehold Section 1(b) provides a

Petitioners failed to substantiate a qualified tuition and related expense. Petitioners produced a document which notified petitioner husband that his payment to the University ofTulsa had been returned because ofinsufficient funds. Respondent's disallowance ofthis deduction is sustained. V. Head ofHousehold Section 1(b) provides a

The American Opportunity Credit provides for a credit against tax equal to 100% ofqualified tuition and related expenses paid by a taxpayer during the taxable year up to $2,000, plus 25% of such expenses paid that exceed $2,000 but do not exceed $4,000, allowing for a maximum credit of$2,500. Sec. 25A(i)(1). Up to 40% ofthe credit may

25.2512-2(a), (f), Gift Tax Regs. In summary, the Cavallaros' criticisms ofand arguments concerning the Bello valuation generally lack merit. Mr. Bello's valuation was not arbitrary and excessive, except in the one respect to which we now turn. 4. The 90th percentile profit margin calculation When Mr. Bello performed the profit reallocation to

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

The American opportunity credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayerduring the taxable year * * * as does not exceed $2,000, plus * * * 25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(i)(1). The

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

It provides for a credit for qualified tuition and related expenses paid by a - 4 - taxpayer for education furnished to an eligible student. The credit is equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayerduring the taxable year * * * as does not exceed $2,000, plus (B) 25 percent ofs

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

ities engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens, Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was - 51 - [*51] no "business" to conduct,just a single type oftransaction, and even it wasn't in

The American Opportunity Tax Cred- it provides for a credit against tax equal to "100 percent ofso much ofthe quali- fled tuition and related expenses paid by the taxpayer during the taxable year * * * - 6 - as does not exceed $2,000" plus "25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Id. para. (1)

various deductions claimed on Schedules C, Profit or Loss From Business; (3) is entitled to deductions for student loan interest for 2011 and 2012; (4) is entitled to a tuition and fees deduction for 2012; (5) is entitled to education credits under section 25A for 2011; (6) must include in his 2012 income a State income tax refund he received that year; (7) is entitled to a ¹(...continued) Code (Code) of 1986, as amended, in effect for the years in issue.

No. 19 UNITED STATES TAX COURT JAMES M. GALLOWAY AND SARAH M. GALLOWAY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 8170-14. Filed October 10, 2017. On their 2011 Federal income tax return, Ps claimed a $7,500 credit under I.R.C. sec. 25A for expenses related to their children's postsecondary education. Petitioners failed to carry from Form 8863 to Form 1040 the $4,500 nonrefundable portion ofthe credit, claiming on Form 1040 only the $3,000 refundable portion, which r

It provides for a credit for qualified tuition and related expenses paid by a taxpayer for education furnished to an eligible student. The credit is equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayerduring the taxable year * * * as does not exceed $2,000, plus (B) 25 - 10 - percent of

s engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), af[g T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was 2¹(...continued) intent-seeking approach to determining the existence ofa partnership applies

The American Opportunity Credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayerduring the taxable year * * * as does not exceed $2,000, plus (B) 25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(i)(1). The cr

Application ofthe DSUE Regulations To support the claim that the regulations prohibit the Commissioner's action, the estate cites section 25.250[5]-2(e), Gift Tax Regs., relating to the application ofthe DSUE to taxable gift transfers.

25.2511-2(c), Gift Tax Regs. ("A gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title to the property in himself."). Therefore, we will grant the estate's motion for summaryjudgment in regard to the gift tax deficiency.¹² V. Conclusion As noted at the outset, our disposition ofthe parties' mot

25.2511-2(c), Gift Tax Regs. ("A gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title to the property in himself."). Therefore, we will grant the estate's motion for summaryjudgment in regard to the gift tax deficiency.¹² V. Conclusion As noted at the outset, our disposition ofthe parties' mot

. 207(a)(1) and (2), 129 Stat. at 3082- 3083, effective for taxable years beginning after December 31, 2015, to extend the penalty to tax return preparers determining eligibility for, or the amount of, the credit under sec. 24 (child tax credit) and sec. 25A(a)(1) (Hope Scholarship Credit). - 11 - 6695(g) penalty within the IRS. See Internal Revenue Manual (IRM) pt. 20.1.6.19.1(1) (May 16, 2012). A claim for credit or refund ofa penalty paid under section 6695 shall be filed within three years f

s engaged in for profit." Brook, Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), af[g T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamont v. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies routine, or a series oftransactions. Here, there was 2¹(...continued) intent-seeking approach to determining the existence ofa partnership applies

(continued...) - 16 - [*16] In general, "qualified higher education expenses" means qualified higher education expenses (as defined in section 529(e)(3)) for education furnished to the taxpayer, the taxpayer's spouse, or any child ofthe taxpayer or the taxpayer's spouse, at an eligible educational institution.

Section 25A authorizes an American Opportunity Tax Credit2 equal to (1) 100% ofso much ofthe qualified tuition and related expenses paid by the taxpayer during the taxable year for education furnished during any academic period beginning in such taxable year as does not exceed $2,000, plus (2) 25% ofsuch 2 The American Opportunity Tax Credit is a m

The sole issue for decision is whetherpetitioner is entitled to education credits under section 25A for the taxable year 2012.

ilable for such (continued...) - 8 - ineffectiveness ofthe prior, discretionarywhistleblowerprogram, now codified as section 7623(a). In 2010, the IRS provided administrative guidance regarding the whistle- blower program in Internal Revenue Manual sec. 25.2.2.12 (June 18, 2010).9 That guidance, in pertinent part, states: (1) "Collected proceeds" are the monies the IRS obtains directly from a taxpayerwhich are based upon the information the 8(...continued) payments. The sec. 7623(a) discretionar

In general, "qualified higher education expenses" means qualified higher education expenses (as defined in section 529(e)(3)) for education furnished to the taxpayer, the taxpayer's spouse, or any child ofthe taxpayer or the taxpayer's spouse, at an eligible educational institution.

ilable for such (continued...) - 8 - ineffectiveness ofthe prior, discretionarywhistleblowerprogram, now codified as section 7623(a). In 2010, the IRS provided administrative guidance regarding the whistle- blower program in Internal Revenue Manual sec. 25.2.2.12 (June 18, 2010).9 That guidance, in pertinent part, states: (1) "Collected proceeds" are the monies the IRS obtains directly from a taxpayerwhich are based upon the information the 8(...continued) payments. The sec. 7623(a) discretionar

The American Opportunity Credit provides for a credit against tax equal to 100% ofqualified tuition and related 6 expenses paid by a taxpayer during the taxable year up to $2,000, plus 25% of such expenses paid that exceed $2,000 but do not exceed $4,000, allowing for a maximum credit of$2,500. Sec. 25A(i)(1). Up to 40% ofthe credit m

Tax Court Rules of Practice and Procedure. Respondent determined a deficiency of$2,500 in petitioners' Federal income tax for 2012. The sole issue for decision is whether petitioners are entitled to the American Opportunity Tax Credit (AOTC) under section 25A. Background Some ofthe facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioners resided in California at the time they timely filed their petitio

petitioner is entitled to deductions for unreimbursed employee business expenses for 2009 and 2010 in amounts greater than those allowed by respondent; (2) whether petitioner is entitled to charitable contribution deductions for 2009 and 2010 in amounts greater than those allowed by respondent; (3) whether petitioner is entitled to a credit under section 25A for 2009; and (4) whether petitioner is liable for an accuracy-relatedpenalty under section 6662(a) for 2010.

e trust's 60 beneficiaries. In order for a donor to qualify for this annual exclusion, the donee must receive a "present interest in property," that is, an unrestricted right to the imme- diate use, possession, or enjoyment ofproperty. Sec. 2503(b); sec. 25.2503-3(a) and (b), Gift Tax Regs. The IRS disallowed the claimed exclusions, determining that the beneficiaries lacked legally enforceable rights to withdraw funds from the trust and hence that petitioners had made gifts offuture, not present

Section 25.2512-1, Gift Tax Regs. Moreover, even ifsuch relationship is demonstrated, assessed values generally are used 'basically as a corroboration offair market value determined by a more reliable method.'" Estate ofBennett v. Commissioner, T.C. Memo. 1989-681, 58 T.C.M. (CCH) 1056, 1065 (quoting N. Trust Co. v. Commissioner, 87 T.C. 349, 382 (

The American Opportunity Credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayer during the taxable year * * * as does not exceed $2,000, plus (B) 25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(i)(1). The c

ax purposes. See, e.g., Commissioner v. Wemyss, 324 U.S. 303 (1945). The regulations confirm that "[t]he gift tax is not applicable to a transfer for a full and adequate consideration in money or money's worth, or to ordinary business transactions." Sec. 25.2511- 1(g)(1), Gift Tax Regs. The regulations define a "transfer ofproperty made in the ordinary course of business" as "a transaction which is bona fide, at arm's length, and free from any donative intent." Sec. 25.2512-8, Gift Tax Regs.; se

The American Opportunity Credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayer during the taxable year * * * as does not exceed $2,000, plus (B) 25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(i)(1). The c

was a taxable gift. While agreeing that D transferred the stock in settlement ofa bona fide dispute, R contends that the transfer was not made "in the ordinary course ofbusiness" or "for a full and adequate consideration in money or money's worth," sec. 25.2511- 1(g)(1), Gift Tax Regs., because no consideration was furnished by D's children, the transferees ofthe stock. 1. HeM: D's transfer ofstock was made in the ordinary course ofbusiness and for a full and adequate consideration in money or

25.2512-8, Gift Tax Regs. A transfer ofproperty between family members normally receives close scrutiny, see, e.g., Frazee v. Commissioner, 98 T.C. 554, 561 (1992), but can be treated as one "in the ordinary course ofbusiness" ifit meets the criteria set forth above, see Stern v. United States, 436 F.2d 1327, 1330 (5th Cir. 1971). Petitioner,

25A(g)(5); see also sec. 1.25A-5(d), Income Tax Regs. It is not clear from the record whether petitioner also reported the $2,250 expense on either his Schedule A or Schedule C for 2011. (continued...) - 10 - [*10] was not necessary to his business, but rather helpful in broadening his knowledge and making him more marketable to prospective c

e trust's 60 beneficiaries. In order for a donor to qualify for this annual exclusion, the donee must receive a "present interest in property," that is, an unrestricted right to the imme- diate use, possession, or enjoyment ofproperty. Sec. 2503(b); sec. 25.2503-3(a) and (b), Gift Tax Regs. The IRS disallowed the claimed exclusions, determining that the beneficiaries lacked legally enforceable rights to withdraw funds from the trust and hence that petitioners had made gifts offuture, not present

The American Opportunity Credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayer during the taxable year * * * as does not exceed $2,000, plus (B) 25 - 6 - [*6] percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(

40n the original retum, petitioners claimed education credits associated with petitioner husband's child J.F. Petitioners then amended theirreturn, removing the dependency exemption deduction and the education credits associated with J.F. as a result ofrespondent's examination. The remaining American opportunity credit is attributab

s engaged in for profit.'" Brook Inc. v. Commissioner, 799 F.2d 833, 839 n.7 (2d Cir. 1986), aff'g T.C. Memo. 1985-462 and T.C. Memo. 1985-614; Lamontv. Commissioner, 339 F.2d 377, 380 (2d Cir. 1964) (quoting 4 Mertens Law ofFederal Income Taxation, sec. 25.08 (1960)). The phrase "course ofactivities" implies more than a single transaction; it implies '3 This entity-focused and intent-seeking approach to determining the existence ofa partnership applies broadly--notjustto partnerships engaged in

25.2502-2, Gift Tax Regs. The gift tax is imposed upon the donor's act of making the transfer, rather than upon receipt by the donee, and it is measuredby the value ofthe propertypassing from the donor, rather than the value of enrichmentresulting to the donee. 26 C.F.R. sec. 25.2511-2(a). Donative intent on the part ofthe donor is not an esse

25.6019-1(a), Gift Tax Regs. The Commissioner is generally required to assess gift tax withinthree years after a Form 709 is filed. See sec. 6501(a). The period oflimitation will commence once a taxpayer discloses a gift on a Form 709, or on a statement attachedto a Form 709, in a manner that is adequate to apprise the Secretary ofthe nature o

Eligible students should, in addition to other requirements, have been enrolled at an eligible educational institution in a program leading toward a postsecondary degree, certificate, or other recognized postsecondary educational credential. See sec. 1.25A-3(d), Income Tax Regs. As this was not the case for K.H., petitioner is not

25.2502-2, Gift Tax Regs. The gift tax is imposed upon the donor's act of making the transfer, rather than upon receipt by the donee, and it is measuredby the value ofthe propertypassing from the donor, rather than the value of enrichmentresulting to the donee. 26 C.F.R. sec. 25.2511-2(a). Donative intent on the part ofthe donor is not an esse

Stadler's memorandum included a paragraph stating: Section 25.1.6.2(5) ofthe IRM [Internal Revenue Manual] provides, "Ifcriminal prosecution ofa taxpayerhas been recommended by CI [respondent's criminal investigative unit] to the Department of Justice, the civil fraud penalty or fraudulent failure to file may be removed only upon written recommendation or concurrence by Area Counsel.

buyer standard is described in substantially identical language both for valuing charitable contributions of property for income tax purposes and for valuing gifts ofproperty for gift tax purposes. Compare sec. 1.170A-1(c)(2), Income Tax Regs., with sec. 25.2512-1, Gift Tax Regs. See sec. 20.2031-1(b), Estate Tax Regs. (same definition for estate tax valuations). And it is only on account ofa charitable contribution deduction provided for in the gift tax statute that gifts to charity are not inc

It is, therefore, tantamount to a finding that decedent did not retain the power to "alter, amend, revoke, or terminate" the gifts within the meaning ofsection 2038." Moreover, that finding also must be considered a finding that those gifts satisfied the requirement ofsection 25.2511-2, Gift Tax Regs., that the donor cede dominion and control over the property in order for there to be a gift for Federal gift tax purposes.

then the excess ofthe value ofthe property transferred over the consideration received is deemed a gift. Sec. 2512(b); see Commissionerv. Wemyss, 324 U.S. 303, 306-307 (1945). The donor is primarily responsible for paying the gift tax. Sec. 2502(c); sec. 25.2502-2, Gift Tax Regs. Ifthe donor dies before paying the gift tax, the personal representative ofthe donor's estate is responsible for paying the tax out - 31 - [*31] ofthe estate, as a debt due the United States from the estate. See sec. 25

usiness expenses. However, the amount ofsubstantiated expenses is much less than $5,700, the standard deduction for 2009 that was allowed in the statutory notice. On her 2009 tax return, petitioner claimed $198 as a refundable education credit under section 25A(i). That credit was allowed in the statutory notice. Discussion The first time this case was set for trial, it was continued so that petitioner could collect and produce records substantiating the deductions that she claimed on the Form 2

.L. Because J.L. filed ajoint return with her husband for tax year 2008, petitioners are not entitled to a dependency exemption deduction for her. See sec. 152(b)(2). Consequently, they are also not entitled to an education credit on her behalfunder section 25A. See sec. 25A(f)(1)(A)(iii). Accordingly, we sustain respondent's determinations to disallow the dependency exemption deduction and the claimed education credit with respect to J.L. IV. Accuracy-RelatedPenalty Section 6662(a) and (b) impo

which that property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge ofthe relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The determination offair market value is a question of fact. See CTUW Georgia Ketteman Hollingsworth v. Commissioner, 86 T.C. 91, 98 (1986). -13 - [*13] Petitioner appears to argue that summaryjudgment should be granted

own as tax by the 9See sec. 21 (expenses for household and dependent care services necessary for gainful employment); sec. 22 (credit for the elderly and the permanently and totally disabled); sec. 23 (adoption expenses); sec. 24 (child tax credit); sec. 25 (interest on certain home mortgages); sec. 25A (hope and lifetime learning credits); sec. 25B (elective deferrals and IRA contributions by certain individuals); sec. 25C (nonbusiness energy property); sec. 25D (residential energy efficient pr

at 7, 15-16; see also Dunlap v.

After concessions,1 the sole issue for decision is the amount ofthe section 25A lifetime learning credit to which petitioner is entitled for tax year 2010.

n of a deficiency. See sec. 21 (expenses for household and dependent care services necessary for gainful employment); sec. 22 (credit for the elderly and the permanently and totally disabled); sec. 23 (adoption expenses); sec. 24 (child tax credit); sec. 25 (interest on certain home mortgages); sec. 25A (hope and lifetime learning credits); sec. 25B (elective deferrals and IRA contributions by certain individuals); sec. 25C (nonbusiness energy property); sec. 25D (residential energy efficient pr

25-305(a)(1) (2002). In deciding whether to allow such an alteration, the New York City Administrative Code requires LPC to consider whether the alteration would change, destroy or affect any exterior architectural feature ofthe subject property and, in the case of an improvement, whetherthe addition would be inharmonious with the external app

Section 25.2511-1(g)(1), Gift Tax Regs., provides in pertinent i part Donative intent on the part ofthe transferor is not an essential element in the application ofthe gift tax to the transfer. The application ofthe tax is based on the objective facts ofthe transfer and the circumstances under which it is made, rather than on the subjective motives

The American opportunity credit provides for a credit against tax equal to "(A) 100 percent ofso much ofthe qualified tuition and related expenses paid by the taxpayer during the taxable year * * * as does not exceed $2,000, plus (B) 25 percent ofsuch expenses so paid as exceeds $2,000 but does not exceed $4,000." Sec. 25A(i)(1). The c

Zaklama's income -0- 0 (346) -0-^ (100,000) (157,81g) Unreportedincome -0~ -0- (500) -0- (2,007) (2,353) Rental income (2,000) (3,800) (5,077) -0- -0- (500) Nonemployeecompensation -__(§25) (2,702) -0- -0- (5,077) Self-employmentexpenses -0- -0- -0- (8,502) Self-employmentnetincome -- 965 221,847 142g) -..

udes "reversions, remainders, and other interests or estates, whether vested or contingent, and whether or not supported by a particular interest or estate, which are limited to commence in use, possession, or enjoyment at some future date or time." Sec. 25.2503-3(a), Gift Tax Regs. A present interest, however, is "An unrestricted right to immediate use, possession, or enjoyment ofproperty or the income from property".· Sec. 25.2503-3(b), Gift Tax Regs. The terms "use, possess or enjoy" connote

25.24.152(a) (West 2010)). And Colorado as well, since at least 1992. See 1992 Colo. Legis. Serv. H.B. 92-130, sec. 1 (West) (currently codified at Colo. Rev. Stat. Ann. sec. 14-10-115(12) (LexisNexis 2012)). These states are by no means outliers.5 In states that have 4(...continued) indicates that the IRS would ignore a taxpayer's late submis

uing a life insurance policy that has been in force for some time and:requires furtherpremium payments to be made, the value may be approximated by making adjustments to the interpolated terminal reserve." See sec. 20.2031-8(a)(2), Estate Tax Regs.; sec. 25.2512-6(a), Gift Tax Regs. This method niay not be used, however, if"because ofthe unusual nature ofthe contract such an approximation is not reasonably close to the full value ófthe contract". Sec. 20.2031-(8)(a)(2), Estate Tax Regs. The esta

25:2-1 (West 1997 & Supp. 2012). Under the Court's holding in Carlson, Mr. Shepherd's pension will not escape classification as an asset under section 108(d)(3) solely because of its exemption from claims ofcreditors. Mr. Shepherd had the ability to withdraw some portion ofhis pension on the date ofpetitioners' discharge. A member ofPERS "may

2002), the Court of Appeals for the Eighth Circuit upheld the validity ofsection 25.2518-3(b), Gift Tax Regs., which provides the same definition for an undivided portion ofa disclaimant's entire interest in property for purposes ofsection 2518." In discerning the meaning of"undivided interest", the Court ofAppeals stated: The term "undivided" in its common usage means "not separated out into parts or shares." Webster's

25-305(a) (1) (2002). In determining whether to allow such an alteration, the LPC must consider whether the alteration would "change, destroy or affect any exterior architectural feature" of the subject property and, in the case of an improvement, "whether such construction would affect or not be in harmony with the external appearance of othe

Section 25.2503-3(b), Gift Tax Regs., defines a present interest as "An unrestricted right to the immediate use, possession, or enjoyment of property or the income from property (such as a life estate or term certain)". A transfer does not qualify as a gift of a present interest in property if the beneficiary's enjoyment of the gift is subject to t

On April 19, 2000, decedent established the Sylvia Riese QPRT (the QPRT) under section 25.2702-5, Gift Tax Regs., and executed a deed transferring the residence thereto.

25-3-603(b) (2009)--provides: "If tender of payment of an obligation to pay an instrument is made to a person entitled to, enforce the instrument and the tender is refused, there is discharge". However, the United States Government, as the sovereign, is not bound by such State statutes as the Uniform Commercial Code. See Burnet v. Harmel, 287

han liquidating its assets. The Giustina family had a long history of acquiring and retaining timberlands. We take this into account, but we also assume that the owner of the 41.128-percent limited partner interest is a hypothetical third party, see sec. 25.2512-1, Gift Tax Regs., who seeks the maximum economic advantage from the asset." As Reilly testified, the optimal strategy to maximize the value of the partnership would be to sell the timberland and "get $143 million today." Selling the tim

For life-insurance policies that have "been in force for some time and.on which further premium payments are to -be made," the insurer's policy reserves are used to approximate the value." Section 25.2512-6(a), Gift Tax Regs.

The Olivers did not execute a premarital agreement even though Mr. Oliver considered all income to be his. - 3 - respondent asserted increased,deficiencies' and additions to tax for the tax years at issue that were based upon alleged community property income not included in the notice of deficiency.7 After the asserted increas

An individual filing as a head of household is allowed a credit so long as the individual's adjusted gross income does not exceed $39,000, while an individual filing as, single is allowed a credit so long as the individual's adjusted gross income does not exceed $26,000. Sec. 25B(b); Rev. Proc. 2006-53, sec. 3.06-, 2006-2 C.B.

Villafane's return claimed education credits under section 25A that she concedes were improper, and respondent's proposed disallowance of those credits must be sustained .

25.2503-6(c), Exadple (1), Gift Tax Regs. While most indirect gifts such as paymënts to a third party on behalf of a donee are treated as gifts to the donee, qualified transfers such as payments made directly to a medical care provider are not treated as gifts to the donee for gift tax purposes. Sec. 2503(e) (1); sec. 25.2511-1(c) (1), (h) (2)

y be no sales on the appropriate valuation date, the regulations specifically contemplate the use of sales data within a reasonable period both before and after the valuation date to determine value on that date. Sec. 20.2031-2(b), Estate Tax Regs.; sec. 25.2512-2(b), Gift Tax Regs. - 30 - percent. Moreover, petitioner argues that, in those 2 years, vacant land in Gunnison County appreciated by 87 percent. Respondent objects that Gunnison County comprises many different economic areas, including

n 1256(b)(2) refers to “any foreign currency contract”. Therefore, section 1256(g)(2)(A) should be construed broadly because “contract” is an inherently broad term, and an option, by definition, is a unilateral contract. 1 Restatement, Contracts 2d, sec. 25 (1981). They argue there are no legally significant differences among futures, forwards, and options. Second, petitioners note that no regulations have been issued by the Secretary since 1982 which would limit the definition of a foreign curr

Section 25 .2511-2(a), Gift Tax Regs ., provides : "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 ." Anne made a gift for which, at

Under section 25A(b)(2), Hope Scholarship credits may be claimed for the first 2 years of a student's postsecondary education . Because petitioner claimed Hope Scholarship credits for 2002 and 2003 with respect to his son and daughter, the Hope Scholarship credits petitioner claims for 2004 are disallowed . Section 6651(a)(1) imposes an addition to tax f

Education Credit Section 25A(c) provides in part : SEC .

income from the transferred property, nor the right to designate the persons who would possess or enjoy that property. For a definition of fair market value for purposes of the estate and gift transfer taxes, see sec. 20.2031-l(b), Estate Tax Regs., sec. 25.2512-1, Gift Tax Regs. - 59 - payments came directly from HI-1 THIMA, which was an FLP account, meaning that she retained a present economic benefit from her assets after she "sold" them. Admitting that Michael and Michelle couldn't afford to

25 .2522(c)-3(c)(2)(vi), Gift Tax Regs . Unless otherwise noted, all section references are to the Internal Revenue Code and regulations, and Rule references are to the Tax Court Rules of Practice and Procedure . -6- by former Senator Tom Daschle and South Dakota State government that brings Indians and non-Indians together . The problems tha

owner to another without consideration therefor.” (Emphasis added.)). Beneficial ownership is required. Bare legal title does not control. See Estate of Davenport v. Commissioner, 184 F.3d 1176, 1182-1185 (10th Cir. 1999), affg. T.C. Memo. 1997-390; sec. 25.2511-1(g)(1), Gift Tax Regs. Respondent contends that petitioner did not own the materials relating to his defense of McVeigh in his trial for the Oklahoma City bombing and thus could not have divested himself of ownership in order to effect

ar . Sec . 63(b) and (c) ; Shepherd - 8 - v. Commissioner, T .C. Memo . 1999-19 . Respondent's determination on this issue is sustained . III . Education Credits A taxpayer who incurs tuition and related expenses may be eligible for a credit under section 25A. See sec . 25A(b)(1), (c)(1) . Petitioners contend that Mrs . Williams qualifies for an education credit under section 25A for 2003 and 2004 . Petitioners introduced no evidence concerning where Mrs . Williams attended school or the amount,

dominion and control over, the subject matter of the gift. Estate of Davenport v. Commissioner, supra at 1185-1186; Davis v. Natl. Bank of Tulsa, supra at 486; Barry v. Phillips, supra at 1045; Frazier v. Okla. Gas & Elec. Co., supra at 14; see also sec. 25.2511-2(b), Gift Tax Regs. (a gift is complete only when the donor “has so parted with dominion and control as to leave in him no power to change its disposition, whether for his own benefit or for the benefit of another”). Whether the donor h

dominion and control over, the subject matter of the gift. Estate of Davenport v. Commissioner, supra at 1185-1186; Davis v. Natl. Bank of Tulsa, supra at 486; Barry v. Phillips, supra at 1045; Frazier v. Okla. Gas & Elec. Co., supra at 14; see also sec. 25.2511-2(b), Gift Tax Regs. (a gift is complete only when the donor “has so parted with dominion and control as to leave in him no power to change its disposition, whether for his own benefit or for the benefit of another”). Whether the donor h

net short-term capital gain on the sale of stock in taxable year 2003 ; (3) whether petitioner can claim a dependency exemption for his wife for the 2000, 2002, and 2003 taxable years ; (4) whether petitioner is entitled to an education credit under section 25A for the 2001 and 2002 taxable years or a ' The actual amount of the deficiencies remaining unpaid for all the taxable years at issue except 2001 is significantly less because a portion of the tax due had been withheld .

nce is defined to include any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Sec. 6662(c). It is further defined as the 3 We note that respondent did allow petitioner a Lifetime Learning Credit under sec. 25A with respect to his qualified tuition and related expenses for the taxable year 2000. - 8 - failure to do what a reasonable person with ordinary prudence would do under the same or similar circumstances. Neely v. Commissioner, 85 T.C. 934, 9

ator and FABG. Respondent argues that the expert's opinion is insufficient for purposes of section 2703(b)(3), because it relies on an "isolated comparable" in contravention of the legislative history of, and regulations under, section 2703(b).28 28 Sec. 25.2703-1(b)(4), Gift Tax Regs., provides: (4) Similar arrangement.--(i) In general. A right or restriction is treated as comparable to similar arrangements entered into by persons in an arm's length transaction if the right or restriction is on

25.2511-2(a), Gift Tax Regs. - 12 - The fair market value of the transferred property is the “price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” Sec. 25.2512-1, Gift Tax Regs. Where property

Section 25.2511-1(a), Gift Tax Regs., explains that the gift tax is an excise tax on the transfer and is not a tax on the subject of the gift. Sec. 25.2511-2(a), Gift Tax Regs. Section 25.2511-2(a), Gift Tax Regs., provides: - 13 - The gift tax is not imposed upon the receipt of the property by the donee, nor is it necessarily determined by the me

25.2511-2(a), Gift Tax Regs. - 12 - The fair market value of the transferred property is the “price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” Sec. 25.2512-1, Gift Tax Regs. Where property

3d Cir. 1969), affg. per curiam T.C. Memo 1968-126. For these reasons, we do not recognize petitioner’s transfer of his Anis partnership interest to his children for Federal income tax purposes. Estate of Sanford v. Commissioner, 308 U.S. 39 (1939); sec. 25.2511-2(b), (g)(1), Gift Tax Regs. Thus, petitioners are taxable on the distributions from the Anis partnership in 1998 and 1999. - 39 - D. Whether Petitioner Is Liable for the Penalty for Fraud Under Section 6663(a) 1. Background Respondent c

9 We note that the Internal Revenue Manual, section 25.17.4.4.2 (Sept.

For eligible individuals, section 25A allows credits against tax for qualified tuition and related expenses paid by the taxpayer during the taxable year.

Accuracy-Related Penalties Section 6662 provides that a taxpayer may be liable for a penalty of 20 percent of the portion of an underpayment of tax due to negligence or disregard of rules or regulations.

25:2-1(b) (West Supp. 2003). Petitioner contends that this exemption applies here so as to prevent collection by levy. Petitioner cites In re Yuhas, 104 F.3d 612 (3d Cir. 1997), as support for his claim that his section 401(k) retirement account is exempt from Federal tax lien and levy. In that case, - 10 - the court held that, by operation o

n of Germany. Before 1997, petitioner and Mrs. Bartsch lived in a rented apartment in Zurich, Switzerland. In 1997, petitioner earned a Ph.D. degree in molecular 2 Respondent concedes that petitioners are entitled to a lifetime learning credit under sec. 25A based on a payment in the amount of $9,125. 3 Petitioner Eva Bartsch did not appear at trial and did not execute the stipulation of facts. Accordingly, the Court will dismiss this action as to her. See Rule 123(b). However, decision will be

25.2511-2(a), Gift Tax Regs. The fair market value of the transferred property is the "price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts." Sec. 25.2512-1, Gift Tax Regs. Where property is transferr

25.2518- 2(d)(1), Gift Tax Regs.] See also H. Rept. 94-1380, at 67 (1976), 1976-3 C.B. (Vol. 3) 738, 801. - 11 - B. Contentions of the Parties For purposes of the instant case, the estate concedes on brief that “if Leona accepted the disclaimed property, the property of Trust B is included in Leona’s gross estate under I.R.C. secs. 2036 and 2

Section 25.2512-1, Gift Tax Regs., provides that the value of property for Federal gift tax purposes is “the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts.” The willing buyer and willing seller ar

(3), Income Tax Regs. (similar definition). See generally Rev. Rul. 59-60, sec. 2.02, 1959-1 C.B. 237. The Treasury Department has prescribed a similar definition for Federal estate tax and gift tax purposes. See sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. Petitioner argues that FNBC’s valuations of its swaps met the fair market value requirement of section 475 in that they were the fair value of the swaps for purposes of financial accounting. According to petitioner, FNB

lue of property for gift tax purposes is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.11 Sec. 25.2512-1, Gift Tax Regs. Generally, in valuing shares of a closely held corporation, actual arm’s-length sales of stock in the normal course of business within a reasonable time before or after the valuation date are the best indicators of fair

dering the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts. Sec. 20.2031-1(b) Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The determination of the fair market value of property is a factual determination, and the trier of fact must weigh all relevant evidence of value and draw appropriate inferences. Commissioner v. Scottish Am. Inv. Co.,

5th Cir. 1982); Chanin v. United States, 183 Ct. Cl. 840, 393 F.2d 972 (1968); Estate of Hitchon v. Commissioner, 45 T.C. 96, 103-104 (1965); Tilton v. Commissioner, 88 T.C. 590, 597 (1987); Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121; sec. 25.2511- 1(h)(1), Gift Tax Regs. When the shareholders of a recipient corporation are members of the donor’s family, that fact is strongly indicative of a gift. See Kincaid v. United States, supra; Tilton v. Commissioner, supra; Estate of Hitchon

Section 529(e), expressly limits room and board benefits to individuals who are eligible students, as defined in section 25A(b)(3), and satisfy specified additional requirements.

5th Cir. 1982); Chanin v. United States, 183 Ct. Cl. 840, 393 F.2d 972 (1968); Estate of Hitchon v. Commissioner, 45 T.C. 96, 103-104 (1965); Tilton v. Commissioner, 88 T.C. 590, 597 (1987); Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121; sec. 25.2511- 1(h)(1), Gift Tax Regs. When the shareholders of a recipient corporation are members of the donor’s family, that fact is strongly indicative of a gift. See Kincaid v. United States, supra; Tilton v. Commissioner, supra; Estate of Hitchon

We also note that section 25.2512-8, Gift Tax Regs., specifies that transfers “made in the ordinary course of business (a transaction which is bona fide, at arm’s length, and free from any donative intent), will be considered as made for an adequate and full consideration in money or money’s worth.” We therefore hold that where a transaction involves only the genre

tners - 23 - within the meaning of the statute. The overriding principal is sometimes referred to as the doctrine of "substance over form," or is alternatively described as the "economic substance" test. See, e.g., 1A. Willis, Partnership Taxation, sec. 25.11, pp. 316-319 (1976). [Boynton v. Commissioner, supra at 1158-1159.] Our decision in Boynton v. Commissioner, supra, dealt with section 704(b) as in effect in 1974. As in effect at that time, and as interpreted in Boynton, section 704(b) gen

of gifted shares of stock, we look to “the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” Sec. 25.2512-1, Gift Tax Regs.6 Although we consider all the relevant facts and circumstances in valuing gifted property, the value of a closely held business is best ascertained by relying on actual arm’s- length sales or transfers, if any, of the st

tners - 23 - within the meaning of the statute. The overriding principal is sometimes referred to as the doctrine of “substance over form,” or is alternatively described as the “economic substance” test. See, e.g., 1A. Willis, Partnership Taxation, sec. 25.11, pp. 316-319 (1976). [Boynton v. Commissioner, supra at 1158-1159.] Our decision in Boynton v. Commissioner, supra, dealt with section 704(b) as in effect in 1974. As in effect at that time, and as interpreted in Boynton, section 704(b) gen

5th Cir. 1982); Chanin v. United States, 183 Ct. Cl. 840, 393 F.2d 972 (1968); Estate of Hitchon v. Commissioner, 45 T.C. 96, 103-104 (1965); Tilton v. Commissioner, 88 T.C. 590, 597 (1987); Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121; sec. 25.2511- 1(h)(1), Gift Tax Regs. When the shareholders of a recipient corporation are members of the donor’s family, that fact is strongly indicative of a gift. See Kincaid v. United States, supra; Tilton v. Commissioner, supra; Estate of Hitchon

5th Cir. 1982); Chanin v. United States, 183 Ct. Cl. 840, 393 F.2d 972 (1968); Estate of Hitchon v. Commissioner, 45 T.C. 96, 103-104 (1965); Tilton v. Commissioner, 88 T.C. 590, 597 (1987); Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121; sec. 25.2511- 1(h)(1), Gift Tax Regs. When the shareholders of a recipient corporation are members of the donor’s family, that fact is strongly indicative of a gift. See Kincaid v. United States, supra; Tilton v. Commissioner, supra; Estate of Hitchon

is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Sec. 20.2031- 1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The estate bears the burden of proof.2 Rule 142(a)(1). Both parties rely on the testimony of experts to establish the fair market value of decedent’s WSA stock. We may accept or reject expert testimony according to our

ither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); Snyder v. Commissioner, 93 T.C. 529, 539 (1989); sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. The standard is objective; it uses a hypothetical willing buyer and willing seller. See Propstra v. United States, 680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate of Newhouse v. Commissioner, 94 T.C. 193, 218 (1990). Ho

Although respondent’s counsel speculated that there might be an agreement between the parties with respect to community income, such agreement would be unlikely to allocate all of the income to petitioner. We conclude, therefore, that the decision to be entered in this case should reflect recomputation of petitioner’s tax liabil

5th Cir. 1982); Chanin v. United States, 183 Ct. Cl. 840, 393 F.2d 972 (1968); Estate of Hitchon v. Commissioner, 45 T.C. 96, 103-104 (1965); Tilton v. Commissioner, 88 T.C. 590, 597 (1987); Estate of Trenchard v. Commissioner, T.C. Memo. 1995-121; sec. 25.2511- 1(h)(1), Gift Tax Regs. When the shareholders of a recipient corporation are members of the donor’s family, that fact is strongly indicative of a gift. See Kincaid v. United States, supra; Tilton v. Commissioner, supra; Estate of Hitchon

t value of $145,357. OPINION Congress has imposed a tax on the transfer of property by gift. See sec. 2501(a)(1). The amount of the gift subject to taxation is equal to the fair market value of the property on the date of the gift. See sec. 2512(a); sec. 25.2512-1, Gift Tax Regs. The U.S. Treasury regulations define fair market value as “the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having

ransfer tax purposes, regulations promulgated under section 7520 provide that the relevant actuarial tables for valuing interests covered by the statute are contained in section 20.2031-7, Estate Tax Regs. See sec. 20.7520-1(a)(1), Estate Tax Regs.; sec. 25.7520-1(a)(1), Gift Tax Regs.; see also sec. 20.2031-7T(d)(5), Example (4), Temporary Estate Tax Regs., 64 Fed. Reg. 23187, 23214 (Apr. 30, 1999) (with effective date May 1, 1999, but illustrating the calculation for valuing an annuity of $10,

rket value is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. Sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. On brief, the - 5 - estate further contends that a “hypothetical, willing buyer may only become an assignee under this Partnership Agreement and Texas law”, and Mrs. Dailey “actually transferred” assignee interests, but

Section 20.2031-1(b), Estate Tax Regs., and section 25.2512-1, Gift Tax Regs., provide that the fair market value of an item of property is to be determined in the market in which such item is “most commonly sold to the public.” In the normal situation, a sale “to the public” refers to a sale to the “retail customer who is the ultimate consumer of the property.” Anselmo v.

11 U.S. 546, 551 (1973); Narver v. Commissioner, 75 T.C. 53, 96 (1980), affd. per curiam 670 F.2d 855 (9th Cir. 1982); McShain v. Commissioner, 71 T.C. 998, 1004 (1979); see sec. 1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512- 1, Gift Tax Regs. This is a question of fact to be determined from an examination of the entire record. See, e.g., Lio v. Commissioner, 85 T.C. 56, 66 (1985), affd. sub nom. Orth v. Commissioner, 813 F.2d 837 (7th Cir. 1987); McShain v.

rket value is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. Sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. On brief, the - 5 - estate further contends that a “hypothetical, willing buyer may only become an assignee under this Partnership Agreement and Texas law”, and Mrs. Dailey “actually transferred” assignee interests, but

Section 25.2703-1(d), Gift Tax Regs., uses the following example to illustrate that a lease constitutes a restriction on the use of property under section 2703: Example (1). T dies in 1992 owning title to Blackacre. In 1991, T and T's child entered into a lease with respect to Blackacre. At the time the lease was entered into, the terms of the leas

neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); Snyder v. Commissioner, 93 T.C. 529, 539 (1989); sec. 20.2031-1(b), Estate Tax Regs; sec. 25.2512-1, Gift Tax Regs. The standard is objective; it uses a hypothetical willing buyer and willing seller. See Propstra v. United States, 680 F.2d 1248, 1251-1252 (9th Cir. 1982); Estate of Newhouse v. Commissioner, supra at 218. The willing

11 U.S. 546, 551 (1973); Narver v. Commissioner, 75 T.C. 53, 96 (1980), affd. per curiam 670 F.2d 855 (9th Cir. 1982); McShain v. Commissioner, 71 T.C. 998, 1004 (1979); see sec. 1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512- 1, Gift Tax Regs. This is a question of fact to be determined from an examination of the entire record. See, e.g., Lio v. Commissioner, 85 T.C. 56, 66 (1985), affd. sub nom. Orth v. Commissioner, 813 F.2d 837 (7th Cir. 1987); McShain v.

t value of $145,357. OPINION Congress has imposed a tax on the transfer of property by gift. See sec. 2501(a)(1). The amount of the gift subject to taxation is equal to the fair market value of the property on the date of the gift. See sec. 2512(a); sec. 25.2512-1, Gift Tax Regs. The U.S. Treasury regulations define fair market value as “the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having

25.2512- 1, Gift Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973). Mr. Wall gave 9,380 shares of Demco nonvoting common stock to 20 trusts for the benefit of his children on January 1, 1992. The cases at hand therefore require us to determine the fair market value of that Demco stock as of the date of the gifts, Januar

25.2512- 1, Gift Tax Regs.; see also United States v. Cartwright, 411 U.S. 546, 551 (1973). Mr. Wall gave 9,380 shares of Demco nonvoting common stock to 20 trusts for the benefit of his children on January 1, 1992. The cases at hand therefore require us to determine the fair market value of that Demco stock as of the date of the gifts, Januar

Whether Nikita, E. Lawrence Helm, CPA (Helm) and Victor Bezman, Esq. (Bezman) engaged in a conspiracy to defraud Petitioner in connection with the redemption of her PCAB stock. C. Whether the redemption of Petitioner’s PCAB stock at a stated redemption price of $3,000,000 constituted a bad business bargain by Petitioner, irrespectiv

25-205 (1995 Reissue), which reads in pertinent part as follows: Actions on written contracts, on foreign iudgments, or to recover collateral. (1) Except as provided in subsection (2) of this section, an action upon a specialty, or any agreement, contract, or promise in writing, or foreign judgment, can only be brought within five years; * * *

ive facts of the transfers and the circumstances under which they were made evidence of decedent's actual intent in making the stock transfers. See United States v. Estate of Grace, 395 U.S. 316, 323 (1969); Heyen v. United States, supra at 362-363; sec. 25.2511-1(g)(1), Gift Tax Regs. The evidence shows that the simultaneous transfers were all part of a prearranged single transaction. It is clear that decedent arranged to give annually to each recipient the number of MBI shares that would avoid

25.2512-2(f), Gift Tax Regs. We have broad discretion in assigning weight to the various factors and in selecting the method of valuation. See Estate of O'Connell v. Commissioner, 640 F.2d 249, 251-252 (9th Cir. 1981), affg. on this issue and revg. in part T.C. Memo. 1978-191; sec. 25.2512-2(f), Gift Tax Regs. The determination of the value of

25.2518-3(a)(1)(i), Gift Tax Regs.] In addition, we decline respondent’s invitation to question the validity of these disclaimers on the grounds that those executed by the guardian ad litem failed to protect the best interests of the beneficiaries. The renunciations endeavor to preserve in excess of $14 million in a trust naming Mr. Lassiter’s

ng reasonable knowledge of relevant facts.” United States v. Cartwright, 411 U.S. 546, 551 (1973); Estate of Hall v. Commissioner, 92 T.C. 312 (1989); Estate of Heckscher v. Commissioner, 63 T.C. 485, 490 (1975); sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2501-1, Gift Tax Regs. The willing seller and buyer are hypothetical rather than specific individuals or entities. See Estate of Bright v. United States, 658 F.2d 999, 1005-1006 (5th Cir. 1981). The issue is factual and to be resolved from al

25.2512-8, Gift Tax Regs. By the Agreement, decedent agrees to leave Bell no less than what he left to her in his 1981 will. By the 1981 will, decedent devised Bell his house and bequeathed to her his personal property, $100,000, and three grave sites. Other than decedent’s daughter, Bell is by far the most favored beneficiary under the 1981 w

compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); Propstra v. United States, 680 F.2d 1248, 1251 (9th Cir. 1982); sec. 20.2031-1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs. Respondent contends that the fair market value of the apartment building was $139,900 on August 10, 1993. Petitioners contend that the fair market value was $106,000. B. Expert Witnesses Both parties relied on expert wi

Section 25.2704-2(b), Gift Tax Regs., further defines an applicable restriction as follows: (b) Applicable restriction defined. An applicable restriction is a limitation on the ability to liquidate the entity (in whole or in part) that is more restrictive than the limitations that would apply under the State law generally applicable to the entity i

a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031- 1(b), Estate Tax Regs.; sec. 25.2512-1, Gift Tax Regs.2 If 2 Petitioner bears the burden of proving that respondent’s determination in the notice of deficiency is erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). - 6 - selling prices for stock in a cl

Hastie to make gifts on behalf of dece- - 21 - dent.5 In further support of its position that the transfers of funds represented by the November 1995 checks and the January 1996 checks constitute nontaxable gifts made by decedent, the estate argues: Regulation § 25.2511-1(g)(1) makes it abundantly clear that Floy Christensen did not have to possess donative intent at the time of the Gift Checks to have made a gift.

(e.g., the wrong services for the patient’s needs, or services that are improperly rendered), and seeking to assure that enough services are provided to meet the patient’s needs. See 2 National Health Lawyers Association, Health Law Practice Guide, sec. 25.1, at 25- 3 (1997). The record does not reflect that petitioner performed any quality assurance work. Likewise, the record is silent as to how petitioner, in the absence of any operable quality assurance agreement, purports to assure itself t

skins v. Huskins, 517 S.E.2d 146, 150 (N.C. Ct. App. 1999); Creekmore v. Creekmore, 485 S.E.2d 68, 72 (N.C. Ct. App. 1997), because, under North Carolina law, the donor can stop payment on a check until the bank pays the check or the donor dies, see sec. 25-4-403, N.C. Gen. Stat. (1995). The checks which the bank did not pay before Mrs. DiSanto died are not completed gifts because the bank did not pay the checks before she died. See Huskins v. Huskins, supra; Creekmore v. Creekmore, supra. Petit

, i.e., the price at which the property would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell, and both having knowledge of relevant facts. See United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. Valuation is an issue of fact, see, e.g., Estate of Newhouse v. Commissioner, 94 T.C. 193, 217 (1990), and petitioners bear the burden of proof, Rule 142(a). We have found that the fair market value of a G&J share was $

25-211 (West Supp. 1998); Guerrero v. Guerrero, 502 P.2d 1077 (Ariz. Ct. App. 1972). The marital community continues to exist in Arizona until the spouses receive a divorce or a decree of legal separation. See Jurek v. Jurek, 606 P.2d 812, 813 (Ariz. 1980); Lynch v. Lynch, 791 P.2d 653, 655 (Ariz. Ct. App. 1990). Moreover, the marital communit

25.2512-2(f), Gift Tax Regs. The other relevant factors include: the good will of the business; the economic outlook in the particular industry; the company’s position in the industry and its management; the degree of control of the business represented by the block of stock to be valued; and the values of securities of corporations engaged in

25-211 (West Supp. 1998); Guerrero v. Guerrero, 502 P.2d 1077 (Ariz. Ct. App. 1972). The marital community continues to exist in Arizona until the spouses receive a divorce or a decree of legal separation. See Jurek v. Jurek, 606 P.2d 812, 813 (Ariz. 1980); Lynch v. Lynch, 791 P.2d 653, 655 (Ariz. Ct. App. 1990). Moreover, the marital communit

skins v. Huskins, 517 S.E.2d 146, 150 (N.C. Ct. App. 1999); Creekmore v. Creekmore, 485 S.E.2d 68, 72 (N.C. Ct. App. 1997), because, under North Carolina law, the donor can stop payment on a check until the bank pays the check or the donor dies, see sec. 25-4-403, N.C. Gen. Stat. (1995). The checks which the bank did not pay before Mrs. DiSanto died are not completed gifts because the bank did not pay the checks before she died. See Huskins v. Huskins, supra; Creekmore v. Creekmore, supra. Petit

ich the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The fair market value of stock is a question of fact. Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo. 1961-347. If selling prices for stock in a closely held corporation which is not listed on

ch the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The fair market value of stock is a question of fact.7 Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo. 1961-347. If selling prices for stock in a closely held corporation which is not listed on

r market value on the valuation date of each of the two blocks of ADDI&C stock in question was $13,518,500, or $540,740 per share.2 If a gift is made in property, its value at the date of the gift is considered the amount of the gift. Sec. 2512(a);3 sec. 25.2512-1, Gift Tax Regs. The value of the property for Federal gift tax purposes is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both

Section 25.2511-2(b), Gift Tax Regs., provides in relevant part: (b) As to any property, or part thereof or interest therein, of which the donor has so parted with dominion and control as to leave in him no power to change its disposition, whether for his own benefit or for the benefit of another, the gift is complete. But if upon a transfer of pro

ck. We use the term "market absorption" when we refer to blockage as applied to assets other than stock. - 36 - 3 T.C. 963, 970-971 (1944); Estate of McKitterick v. Commissioner, 42 B.T.A. 130, 136-137 (1940); sec. 20.2031-2(e), Estate Tax Regs.;11 sec. 25-2512-2(e), Gift Tax Regs. (language similar to that in sec. 20.2031-2(e), Estate Tax Regs.). In other words, the quoted price for shares of a certain type of stock generally reflects the selling price of a relatively small number of those shar

ch the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The fair market value of stock is a question of fact.7 Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo. 1961-347. If selling prices for stock in a closely held corporation which is not listed on

ch the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The fair market value of stock is a question of fact.7 Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo. 1961-347. If selling prices for stock in a closely held corporation which is not listed on

ch the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. The fair market value of stock is a question of fact.7 Hamm v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C. Memo. 1961-347. If selling prices for stock in a closely held corporation which is not listed on

ble as a business expense must be determined from the nature of the expenditure itself which in turn depends on the extent and permanence of the work accomplished by the expenditure. Id. at 193-194 (quoting 6 Mertens, Law of Federal Income Taxation, sec. 25.37, at 118 (1992 rev.). 3. Ordinary Business Advertising “Advertising” is commonly defined as: “The activity of attracting public attention to a product or business, as by paid announcements in print or on the air.” The American Heritage - 33

nt to the decision of this case. Consequently, we do not address these matters. - 6 - being under any compulsion to buy or to sell, and both having a reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. Here, the parties have agreed that the net asset value method is appropriate for the valuation of the stock of the corporation. They are also in agreement as to the fair market value of the property in question and the v

25-211 (West 1976); Goodell v. Koch, 282 U.S. 118 (1930). Accordingly, each spouse must report one-half of such income when a separate income tax return is filed. United States v. Mitchell, 403 U.S. 190, 198 (1971). - 10 - We have found as a fact that petitioner was married to Mr. Mischel throughout 1992 and lived with him during the year. Th

Co-op. 1992). On August 22, 1978, petitioner and his wife purchased the marital home and held it as tenants by the entirety up to the time of their divorce. Under the Michigan statute, unless the divorce decree provided otherwise, upon their divorce they became tenants in common. The property settlement attached to the divorce dec

n the grounds that the contingent beneficiaries did not hold present interests in the trust. OPINION Generally, the annual gift tax exclusion under section 2503(b) applies to gifts made in trust. Helvering v. Hutchings, 312 U.S. 393, 396-397 (1941); sec. 25.2503-2(a), Gift Tax Regs. The annual exclusion provides that gifts made to beneficiaries during a calendar year shall be excluded from taxable gifts to the extent they do not exceed $10,000 per - 5 - beneficiary per year. Sec. 2503(b); sec. 2

25.2512-1, Gift Tax Regs. Valuation is an issue of fact, and petitioner bears the burden of proof. Rule 142(a). We have found that the fair market value of the undivided interest was $7,404,649 on February 6, 1987. We will explain our reasons for making that finding. - 7 - II. Valuation of the Gift In part, to support their respective valuati

Co-op. 1992). Shortly before the case was submitted to the Court, the Government conceded half of the deficiency relying, in error, on Friscone v. Commissioner, T.C. Memo. 1996-193. In Friscone, the divorce court, constrained by a buy-sell agreement, divided ownership of stock between two divorcing spouses beneficially, by allocat

Section 25 of the Texas Professional Association Act, Tex. Civ. Stat. Ann. art. 1528(f) (West 1980) provides that: The Texas Business Corporation Act shall be applicable to professional associations, except to the extent that the provisions of the Texas Business Corporation Act conflict with the provisions of this Act; and professional associations

25.04 (West 1969), on November 9, 1982, by 20 individuals. Each of Cascade’s 20 partners was also a partner in Price Waterhouse, a certified public accounting partnership that also specializes in tax matters. John R. Walsh, Jr. (Walsh), who also was a Price Waterhouse partner but not a partner of Cascade, was the promoter of Cascade. Walsh pro

if a person makes a qualified disclaimer with respect to an interest in property, then the Federal estate, gift, and generation-skipping transfer tax provisions apply "as if the interest had never been transferred to such person." Sec. 2518(a); see sec. 25.2518-1(b), Gift Tax Regs. The interest is treated as passing directly from the transferor of the property to the person entitled to receive it as a result of the disclaimer. Sec. 25-2518-1(b), Gift Tax Regs. If property is treated as passing

ch the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts. United States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 25.2512-1, Gift Tax Regs. If the stock does not sell for its fair market value, then reasonable modifications of that price are made to decide its fair market value. See sec. 20.2031-2(e), Estate Tax Regs. If selling prices for stock are unavail

ate of the decedent's death or (2) the alternate valuation date as provided under section 2032. Secs. 2031(a) and 2032(a); sec. 20.2031- 1(b), Estate Tax Regs. For Federal gift tax purposes, property is valued on the date of the gift. Sec. 2512(a); sec. 25.2512-1, Gift Tax Regs. In both cases, value is a factual determination for which the trier of fact must weigh all relevant evidence and draw appropriate inferences and conclusions. Commissioner v. Scottish Am. Inv. Co., 323 U.S. 119, 123-125 (

That ownership does not change except by operation of law or through an agreement between husband and wife. Potthoff v. Potthoff, 627 P.2d at 712. In certain cases, the character of a spouse's separate property may be changed to community property "if the circumstances clearly demonstrate that [that] * * * spouse intended to eff

25.2512-1, Gift Tax Regs. - 16 - And section 6324(b) specifically provides that "Any part of * * * the gift transferred by the donee * * * to a purchaser * * * shall be divested of the lien imposed by this subsection". The purchaser takes title free and clear of the lien. Thus, the gift tax lien would not be likely to affect the amount a buye