397 F.2d 245 (4th Cir. 1968), 12013-12016, Rosen v. C.I.R.

Docket Nº:12013-12016.
Citation:397 F.2d 245
Party Name:Leonard ROSEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Dorothy ROSEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Julius J. ROSEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Claire A. ROSEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Case Date:June 14, 1968
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 245

397 F.2d 245 (4th Cir. 1968)

Leonard ROSEN, Petitioner,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

Dorothy ROSEN, Petitioner,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

Julius J. ROSEN, Petitioner,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

Claire A. ROSEN, Petitioner,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

Nos. 12013-12016.

United States Court of Appeals, Fourth Circuit.

June 14, 1968

Argued April 2, 1968.

Jacquin D. Bierman, New York City, on brief for petitioners.

Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson, Robert N. Anderson, and David English Carmack, Attys., Department of Justice, on brief, for respondent.

Before HAYNSWORTH, Chief Judge, and CRAVEN and BUTZNER, Circuit Judges.

Page 246

CRAVEN, Circuit Judge:

These consolidated appeals are taken from a decision of the Tax Court adverse to the taxpayers/appellants Leonard Rosen, Dorothy Rosen, Julius J. Rosen and Claire A. Rosen. The only issue presented for review is their entitlement to annual exclusions of up to $3,000 per donee in the computation of gift taxes. We hold that the taxpayers are entitled to the exclusions for the years in question, 1961, 1962 and 1963, in respect to the 'income interests' of shares of Gulf American Land Corporation donated by the taxpayers to trusts created by them in 1961. We further hold that valuation of the donated income interests may be accomplished by reference to actuarial tables published by the Commissioner and we remand the case to the Tax Court for a (1) determination as to which of the tables is most appropriate to value the donated income interests and (2) determination of the precise dollar amount of exclusion to which the taxpayers are entitled for each year. 1

Leonard Rosen and his brother Julius J. Rosen are in substantial control of Gulf American Land Corporation (Gulf American), a business incorporated in Florida in 1957 and devoted to the acquisition and development of large tracts of unimproved real estate into a planned community in which homesites, multiple dwelling sites and commercial and industrial lots are offered for sale. Through subsidiaries, the company has also engaged in the construction of houses, in land drainage, the construction of roads and waterways, etc. The company's major project during the years 1961-1963 was the development of a large tract of land on the southwest coast of Florida. The company's basic policy has been to increase its raw land inventory for development and subdivision purposes.

Although Gulf American stock is held by public shareholders as well as the Rosens, the company has never paid a dividend on its common stock but has retained all of its earnings for growth purposes. It...

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