34 T.C. 1132 (1960), 73242, Briggs v. C. I. R.

Docket Nº:73242.
Citation:34 T.C. 1132
Opinion Judge:TIETJENS, Judge:
Attorney:Walter L. Nossaman, Esq., and Joseph L. Wyatt, Jr., Esq., for the petitioner. L. Justin Goldner, Esq., for the respondent.
Case Date:September 29, 1960
Court:United States Tax Court

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34 T.C. 1132 (1960)




No. 73242.

United States Tax Court

September 29, 1960

Walter L. Nossaman, Esq., and Joseph L. Wyatt, Jr., Esq., for the petitioner.

L. Justin Goldner, Esq., for the respondent.

Held, gifts of stock to infant donees under guardianship, were gifts of present interests in property.



The petitioner contests a deficiency of $5,255.81 in gift tax for 1954, based on a determination by the Commissioner that gifts of stock made by petitioner to nine minor donees under guardianship were gifts of future interests in property rather than present interests.

All of the facts are stipulated and the stipulation of facts together with the pertinent exhibits are incorporated herein by reference.

Petitioner permanently resides in Naples, Florida, where she resided during the taxable year 1954. Her gift tax return for that year was filed with the director of internal revenue at Jacksonville, Florida.

The gifts in question consisted of shares of corporate stock of the Outboard Marine & Manufacturing Company and were made by the petitioner and her husband by deed of gift to already-appointed guardians of the minor donees. During 1954 the minor donees resided in California and Illinois with their respective parents.

Each gift made to the children in California was made ‘ subject to terms and conditions of the order of the Superior Court for Los Angeles County in the matter of your guardianship’ made by the court authorizing the donee's guardian to accept the gifts. The gift made to the minor donee residing in Illinois was made subject to the same conditions, specified in the deed of gift itself. The conditions attached to each gift were stated as follows:

1. That each gift is made subject to all gift taxes thereon. The Donee shall pay all such taxes imposed upon the Donor (Stephen F. Briggs or Beatrice B.

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Briggs, as the case may be) by reason of such gift, or shall reimburse the Donor therefor, without interest. Such payment or reimbursement shall be made only out of the corpus of the donated property, or out of other property of the Donee, and in no case out of income from the donated property.

2. That your Guardian shall be authorized but not required to use or expend any part of the donated property or of the income therefrom, or both, for your support, maintenance and education; any income not used for the purposes mentioned to be invested for your benefit.

3. That your Guardian shall in no case be required to convert the donated shares of stock into any other form of holding, but is authorized to retain such shares as long as in your Guardian's judgment retention is in the best interests of yourself, as Donee.

The parents of each beneficiary were at the time of the gift and thereafter fully willing and able to provide adequately for the maintenance, education, and support of each of the beneficiaries. Petitioner was aware of this fact and expected that state of affairs to continue, but she recognized the possibility that future needs or misfortunes might arise which could alter that state of affairs.

At the time of the gifts in question and thereafter during the minority of the minor donees, the respective fathers of each of the donees served as their respective guardians, duly appointed by an appropriate court, and accounts and reports of each of the guardianship estates have been filed and approved by these courts without any appeal from any of these accounts.

These accounts and reports indicate that dividends from the donated stock were received by the guardians and that disbursements were made from each of the guardianship estates, including cash distributions to the minors themselves (sometimes referred to as ‘ allowances'), payments of the minors' income and...

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