Heidrich v. Comm'r of Internal Revenue , Docket Nos. 2409-69
| Decision Date | 10 February 1971 |
| Docket Number | 2410-69,Docket Nos. 2409-69,2459-69.,2423-69— 2425-69 |
| Parties | MARTHA J. HEIDRICH, ET AL.,1 PETITIONERS V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Kenneth G. Anderson and Hugh F. Culverhouse, for the petitioners.
James D. Burroughs, for the respondent.
Petitioners established and periodically funded certain substantially identical trusts for their minor children and grandchildren. Under the terms of the trusts there were no ‘substantial restrictions' on the exercise of the trustees' discretion during minority. Sec. 25.2503-4(b)(1), Gift Tax Regs. The trusts' terms also provided that upon attaining the age of 21 and at all times thereafter, the beneficiary of each trust would have a continuing right to make a demand on the trustees for the unexpended trust funds. Held, by virtue of sec. 2503(c), I.R.C. 1954, petitioners' transfers to the trusts were not gifts of future interests of property for the purposes of sec. 2503(b), I.R.C. 1954.
In these consolidated proceedings respondent has determined deficiencies in petitioners' gift tax and additions to that tax under sections 6651(a), 5563(a), and 6653(b) of the Internal Revenue Code of 1954 2 as follows:
The parties have settled many of the originally disputed issues. The only question remaining for our decision is whether petitioners' gifts to trusts established for their minor children and grandchildren were other than future interests in property so as to entitle petitioners to the yearly $3,000 per-donee exclusion from taxable gifts allowed by section 2503(b).
All of the facts have been stipulated and are so found. The stipulation and the exhibits attached thereto are incorporated herein by this reference.
Petitioners Herman J. and Sarah F. Heidrich (hereinafter referred to as Herman and Sarah) were husband and wife and resided in Orlando, Fla., at the time of the filing of their petitions herein. Petitioners Francis X. and Doris M. Heidrich (hereinafter referred to as Francis and Doris) were husband and wife and resided in Winter Park, Fla., at the time of the filing of their petitions herein. Petitioners Paul D. and Martha J. Heidrich (hereinafter referred to as Paul and Martha) were husband and wife and also resided in Winter Park, Fla., at the time of the filing of their petitions herein. Petitioners filed all of their Federal gift tax returns for the years involved with the district director of internal revenue at Jacksonville, Fla.
Herman and Sarah had four children including Paul and Francis.3 Francis and Paul have sired a total of 23 children; each child lived with and was provided for by his respective parents. Francis and Paul, as well as Herman, were persons of substantial financial means.
Petitioners established separate trusts for each of these children who were in being during the years in issue. The corpus of each trust consisted of corporate debenture bonds4 which certain5 of the petitioners donated to the trusts from time to time during the relevant years. At the time each of these gifts was made the child to whom the benefit of the gift would accrue was a minor.
The terms of each of these separate trusts were identical; they differed only in the names of the parties involved. After setting forth the names of the parties, the intentions of the donors, the purposes of the trust, the general powers of the trustees, and provisions pertaining to transactions with third parties, each trust agreement provided as follows:
...
To continue reading
Request your trial
- Mackie v. Comm'r of Internal Revenue (In re Estate of Mackie)
-
Cristofani v. Comm'r of Internal Revenue (In re Estate of Cristofani)
...the years in Crummey, 1962 and 1963, the sec. 2503(b) annual exclusion was $3,000. 3 The Ninth Circuit stated: 4 See Heidrich v. Commissioner, 55 T.C. 746, 750 n.8 (1971). 5 We note that the facts of the instant case are very similar to the facts that respondent was presented with in Priv. ......
- Cutter v. Comm'r of Internal Revenue (In re Estate of Cutter)
-
Tompkins v. Comm'r of Internal Revenue (In re Estate of Tompkins)
...(2d Cir. 1966), with United States v. First National Bank & Trust Co. of Augusta, 297 F.2d 312 (5th Cir. 1961). In Heidrich v. Commissioner, 55 T.C. 746, 752—753 (1971), the issue was whether unexpended trust funds would pass to the donee upon his attaining the age of 21. At any time after ......
-
Table of cases
...§3:06 Marshall v. Marshall , 735 SW2d 587, 596 (Tex App — Dallas 1987, writ ref’d n.r.e.), §3:31 Martha J. Heidrich v. Commissioner , 55 TC 746 (1971), §§24:31, 24:41 Martin Brown Co. v. Perrill , 13 SW 975 (Tex 1890), §3:07 Martin v. Martin , 11 SW2d 347 (Tex Civ App — El Paso 1928, writ d......
-
Irrevocable Trusts - Non-Charitable Beneficiaries
...requirement of section 2503(c) that the property be expendable for the minor’s ‘benefit.’”); see also Martha J. Heidrich v. Commissioner , 55 TC 746 (1971) (the standard of “education, comfort and support” is broad enough to not constitute a substantial restriction).] Thus, any restriction ......
-
Alternatives for Funding Gifts to Minors
...See Treas. Reg. § 25.2503-4(b)(2)(1958), Rev. Rul. 74-43, 1974-1 C.B. 285 and Martha J. Heidrich v. Commissioner, 55 T.C. 746 (1971), acq. 1974-1 C.B. 2.33. See I.R.C. § 2642(c)(2).34. See Treas. Reg. § 25.2503-3(b) and Sensenbrenner v. Commissioner, 134 F.2d 883 (7th Cir. 1943).35. Commiss......