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Estate and Gift Tax Outline

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Estate and Gift Tax Outlineand,Gift,Tax,tax,gift

Estate and Gift Tax Outline

Professor Kirsch

Spring 2011

    Gift Tax

    ?2512(b): “Where property transferred for less than an adequate and full consideration in money or money’s

    worth, then the amount by which the value of the property exceeded the value of the consideration shall be

    deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

    What Constitutes A Gift?

    ; Generally:

    o Congress intended an expansive definition of what constitutes a “gift” so as to be subject to the

    gift tax

    o ?2511(a) provides that the gift tax is to apply “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.”

    o Reg. ? 25.2511-1(c)(1) states that “any transaction in which an interest in property is gratuitously

    passed or conferred upon another, regardless of the means or device employed, constitutes a gift

    subject to tax.”

    ; Is Donative Intent Necessary?

    o Transfer Without Valuable Consideration: Commissioner v. Wemyss (Mr. Wemyss gives widow

    $150,000 as consideration for marrying him)

    ; Donative intent is not required for gift tax purposes (see also, 25.2511-1(g)(1): “Donative

    intent on the part of the transferor is not an essential element in the application of the

    gift tax to the transfer.”)

    ; A consideration not reducible to a money value, as love and affection, promise of

    marriage, etc. is to be wholly disregarded, and the entire value of the property

    transferred constitutes the amount of the gift

    o Transfers for Insufficient Consideration

    ; Reg. ?25.2512-8: “Transfers reached by the gift tax are not confined to those only which,

    being without valuable consideration, accord with the common law concept of gifts, but

    embrace as well sales, exchanges, and other dispositions of property for consideration to

    the extent that the value of the property transferred by the donor exceeds the value in

    money or money’s worth of the consideration given therefor. However, a sale, exchange,

    or other transfer of property made in the ordinary course of business (a transaction which

    is a bona fide, at arm’s length, and free from donative intent), will be considered as made

    for an adequate and full consideration in money or money’s worth.

    ; Thus, on finding that a transfer in the circumstances of a particular case is not made in the

    ordinary course of business, the transfer becomes subject to the gift tax to the extent that

    it is not made “for adequate and full consideration in money or money’s worth”

    o Code/Regs:

    ; Code: ? 2511(a)

    ; Regs: ?? 25.2511-1(a), (c), (d), (e), (g)(1); 25-2512-8

    ; Text: pg. 32-35

    ; Interest-Free and Low-Interest Loans

    o The Potential Problem:

    ; Dad gives son $1,000,000 loan and son promises to repay the money without interest

    ; Son then takes the million dollars and puts it in the bank, collecting interest every year

    ; At the end of three years, Son pays Dad back the money of the loan

    o Dickman v. Commissioner: The Supreme Court concludes that an interest-free loan results in a

    taxable gift

    ; Only tax the resulting interest obtained from the loan, not the principle amount

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    ; ?2501(a)(1): “Subject to the limitations in this chapter, the tax imposed by section 2501

    shall apply 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.”

    ; The statute was designed to encompass all transfers of all property and property

    rights having significant value

    ; Congress intended “gifts” in its broadest and most comprehensive sense

    ; The USE of valuable property is itself a legally protectable interest; of the aggregate rights

    associated with property interest, the right of use is in the highest order ; The gift tax is an excise tax on transfers of property; if the taxpayer transfers the money

    to someone else, a taxable event has occurred

    o Statutory Response to Interest-Free and Low-Interest Loans

    ; Confronted with the growing tax avoidance threat, Congress responded by incorporating

    ?7872

    ; The practical effect of 7872 was to largely eliminate the tax advantages of interest-free or

    low-interest loans, making such loans attractive only under limited circumstances ; Requirements of 7872(a): “For the purposes of this title, in the case of any below market

    loan to which this section applies and which is a gift loan or a demand loan, the foregone

    interest shall be treated as….”

    ; Must be a below-market loan

    o Definition of below-market loan found in 7872(e) interest payable on

    the loan is less than the applicable federal rate

    o Applicable Federal Rate is defined in 7872(f)(2) for both term loans and

    demand loans

    ; Applies to gifts under 7872(c) which is defined in 7872(f)(3)

    o Gift Loan under 7872(f)(3) means “any below-market loan where the

    forgoing of interest is in the nature of a gift.

    o Demand Loans under 7872(f)(5) means “any loan which is payable in full

    at any time on the demand of the lender.”

    ; The consequences of falling under 7872 Break it into 2 steps… [Recreates the situation

    that roughly would have existed if Dad had kept the money himself and then made a gift

    to Son)

    ; Step 1: 7872(a)(1)(A): The foregone interest is treated as transferred from the

    lender to the borrower (i.e. from Dad to Son)

    o Dad is treated as if he made a gift in that amount

    o Also applies in compensation related loans in employer/employee

    relationship

    ; Step 2: 7872(a)(1)(B): The foregone interest is treated as retransferred by the

    borrower to the lender as interest

    o Means that Dad has to include the same amount as interest income

    ; What is foregone interest?

    o Not necessarily what the son actually accrued while he was in possession

    of the money

    o See 7872(e)(2): “The excess of the amount of interest that would have

    been payable on the loan for the period if the interest accrued on the

    loan at the applicable Federal Rate (expect son to at least pay the

    market rate on what he borrowed)

    ; Exceptions: Congress has recognized that loans between family members have legitimate

    purposes other than tax avoidance:

    ; General De Minimis Exception provided for gift loans between individual not

    exceeding $10,000 outstanding at any one time (?7872(c)(2)(A))

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    o However, this exception is not available if the loan is “directly attributable

    to the purchase or carrying of income-producing assets.” (?7872(c)(2)(B))

    o Therefore, if the borrower directly of indirectly invests the borrowed

    funds in an asset that produces income, the $10,000 exception does not

    apply

    ; The more important exception applies to loans up to $100,000 (?7872(d))

    o Designed for circumstances such as loans from a parent to a child to

    enable the child to make a down payment on a personal residence

    o If the loan arrangements do not “have as 1 of the principal purposes the

    avoidance of any Federal tax” (?7872(1)(B)), the amount of interest

    imputed is limited to the borrower’s net investment of the borrowed

    funds (?7872(d)(1)(A))

    o Note: eliminates only the imputed interest not the imputed gift

    ; Gifts of Services

    o 2501(a)(1): “A tax, computed as provided in section 2502, is hereby imposed for each calendar

    year on the transfer of property by gift during such calendar year by any individual, resident or

    nonresident.”

    ; “Property” does not generally include personal services

    ; Therefore, advice or directly clients to another person is not a transfer of property, and

    cannot be taxed as a gift

    ; However, a gift of the right to income is clearly taxable as a gift, making the time of a gift

    of services crucial (i.e. customer lists transfers of “intangible” property – might be

    treated as a gift)

    o Revenue Ruling 66-167: Waiver of An Executor’s Fee

    ; When a decedent dies, a relative is appointed as the executor of a decedent’s estate

    ; The executor is generally entitled to receive compensation for their services out of the

    assets of the estate

    ; This revenue ruling provides that as long as you waive the right to compensation within 6

    months, the IRS will respect the waiver. Otherwise:

    ; The crucial test of whether the executor of an estate or any other fiduciary in a

    similar situation may waive his right to receive statutory commissions without

    thereby incurring any income or gift tax liability is whether the waiver involved

    will at least primarily constitute evidence of an intent to render a gratuitous

    service.

    ; If the timing, purpose, and effect of the waiver make it serve any other important

    objective, it may then be proper to conclude that the fiduciary has thereby

    enjoyed a realization of income by means of controlling the disposition thereof

    and, at the same time, has also effected a taxable gift by means of any resulting

    transfer to a third party of his contingent beneficial interest in a part of the assets

    under his fiduciary control.

    o Example of WHY you would want to waive the executor’s fee:

    ; Wife appointed executor -husband had assets of 800,000 in his estate ; Will provides that 1/2 of assets go to wife and 1/2 of assets go to the son ; Wife entitled to an executor fee of $10,000, so there would only be 790,000 left ; To help Son, Wife of the deceased could waive the fee so that the full 400,000 will go to

    Son even though she would have gotten more if she had kept the fee and paid income

    taxes on it

    ; Gift by Agents (aka gifts made under the power of attorney)

    o Two Issues:

    ; (1) Whether the decedent has executed a power of attorney that authorizes the agent

    after the principal loses legal capacity? [Power of Attorney must be DURABLE]

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    ; The power of attorney, at common law, was terminated by the principal’s

    incapacity

    ; A “durable” power of attorney survives the principal’s incapacity, although

    specific language is required to assure the “durability” of the power

    ; Failure to use the required language makes the power ”nondurable” and the

    principal has the power to void the agent’s actions; in that event, gifts by the

    agent will not be treated as completed during the principal’s life, and the

    transferred property will be included and taxed in the decedent’s gross estate

    ; [See Indiana Power of Attorney Handout for language]

    ; (2) Whether the power of attorney even if valid despite the principal’s incapacity –

    confers authority for the agent to make gifts on behalf of the principal?

    ; Planner should draft the power of attorney so as to expressly and specifically

    assure the necessary gift authority

    ; Four principal purposes for asset transfer: sale, lease, mortgage, and gift

    ; If all of these purposes but gift are expressly authorized in the power of attorney,

    the court will assume the gift authority was not conferred

    o Estate of Casey v. Commissioner

    ; Facts: did not expressly confer the power to make gifts in the power of attorney

    ; Agent was trying to take advantage of the gift tax exclusion as he had a durable

    power of attorney and the principal had become incapacitated

    ; Principal had previously established a gift-giving patter, and the agent was simply

    continuing it under the catch-all provision in the power of attorney (i.e. power to

    do what the principal would have done)

    ; Issues: IRS argues, therefore, that the power of attorney did not authorize the agent to

    make gifts on behalf of the principal

    ; Holding: The 4th Circuit concludes that the agent does not have the power to make gifts

    as the document did not expressly authorize doing so, and that therefore the executor of

    the estate had the right to revoke the gifts because they were not legally authorized

    transfers (had the effect of being included in the gross estate for the purpose of the

    estate tax)

    o Estate Planning Note: Typically the principal is not comfortable granting an unfettered power to

    make gifts

    ; Usually the primary tax objectives can be obtained by authorizing gifts not exceeding the

    ?2503(b) exclusion amount for each donee each year within certain categories of family

    members

    ; If the principal is willing, it may be desirable in some cases to go further and authorize

    more substantial transfers i.e. up to the applicable exclusion amount under the gift tax

    unified credit

    ; Indirect Gifts

    o A gift can occur without the direct transaction between a donor and donee; typically occurs in the

    context of a closely held business

    o Recall ?2511 a gift can be either direct or indirect

    o Typically the crucial issue is indirect cases is valuation

    o As with direct transfers, an indirect transfer will not constitute a gift unless the transferor receives

    less than adequate and full consideration in money or money’s worth from the person receiving

    the benefit - ?2512(b)

    ; Payments of Taxes on Trust Income

    o The grantor is taxed on the income of a grantor trust if the grantor retains certain powers or

    benefits with respect to the trust.

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    o The IRS has ruled that the grantor’s payment of income taxes imposed on the income of a grantor

    trust does not constitute a gift to the trust or to the beneficiaries who receive the trust income.

    ; In the case of a grantor trust, neither the trustee nor the beneficiary has any obligation to

    pay tax on trust income, so when grantor pays the income tax, it does not relieve the

    trustee or the beneficiary of any legal obligation.

    ; However, generally for other situations, the gratuitous payment of a tax for which

    another person is liable constitutes a gift by the payor.

    ; Gifts by Trustees

    o The gift tax cannot apply unless the transferor makes himself poorer while making the transferee

    richer.

    o 25.2511-1(g)(1): “A transfer by a trustee of trust property in which he has no beneficial interest

    does not constitute a gift (but such transfer may constitute a gift by the creator of the trust, if

    until the transfer he had the power to change the beneficiaries by amending or revoking the

    trust).

    ; Trustee has no beneficial interest it is his fiduciary duty to watch over the money and

    distribute according to the terms of the trust.

    ; There is no way for the trustee to access the money for himself; even though you can

    technically transfer the money, the trustee is not the one who makes the gift (gift comes

    from the creator of the trust)

    o Two Exceptions:

    ; First, if the trustee is the grantor of a trust (i.e. the person who created the trust), the

    transfer may constitute a gift because the transfer by the trustee completes a gift that

    was initiated when the grantor transferred property to the trust (since you have the

    power to revoke the money from the trust, no gift is yet complete when it is put into the

    trust).

    ; Second, if the trustee has a beneficial interest in the property, the general rule is that a

    distribution that diminishes the trustee’s beneficial interest but benefits the distributee

    constitutes a gift by the trustee to the beneficiary.

    ; However, under 25.2511-1(g)(2): “If a trustee has a beneficial interest in trust

    property, a transfer of the property by the trustee is not a taxable transfer if it is

    made pursuant to a fiduciary power the exercise or the nonexercise of which is

    limited by a reasonably fixed or ascertainable standard. For example:

    ; Necessary for beneficiary’s medical care = fixed and ascertainable standard

    ; Pleasure, desire, happiness of beneficiary = not a fixed or ascertainable standard

    ; Consideration

    o 2512(b): 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 property exceeded the value of the

    consideration shall be deemed a gift.

    o Two central concepts:

    ; Only consideration in “money or money’s worth” is sufficient

    ; “Adequate and full consideration”: in other words, there will be a gift to the extent the

    monetary value of the consideration received is less than the monetary value of the

    consideration given

    o What constitutes consideration?

    ; Lack of full consideration becomes the acid test in determining whether a gift is present

    for gift tax purposes (if the transfer is made for full consideration, the transferor is not

    making herself poorer by the transfer; no tax is being avoided, because the transferor’s

    estate, by reason of the consideration received, is just as large as before the transfer).

    ; 2043(b)(1) expressly denies marital rights the status of consideration for purposes of

    determining whether a death transfer is made for consideration (Merrill v. Fahs) o Divorce Transfers

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    ; For purposes of the gift tax, there is an unlimited marital deduction for transfers between

    spouses

    ; However, the unlimited marital deduction does not apply to ex-spouses

    ; ?2516 indicates that property transfers incident to divorce are fundamentally

    arms-length transactions in which consideration of equal monetary value flows to

    each party, therefore the gift tax should not apply

    ; ?2516 requires both a written agreement and a divorce decree, and all transfers are

    pursuant to the agreement are treated as made for full and adequate consideration;

    transfers must be:

    ; (1) To either spouse in settlement of his or her marital or property rights, or

    ; (2) To provide a reasonable allowance for the support of issue of the marriage

    during minority

    ; Treated as if you didn’t make a gift at all

    ; The timing requirement does not relate to the timing of the property transfer itself

    ; Divorce must occur within a 3-year period beginning 1 year before the date of

    when such agreement was entered in to

    ; 1 yr. before date of agreement 1 yr.Date of Agreement2 yrs. Divorce

    o Discharge of Support Obligations

    ; A divorcing husband does not make a taxable gift when he transfers funds to his wife in

    settlement of her support rights

    ; Exclusion of tuition ?2503(e) and medical expenses ?2503(b) even after the age of

    majority

    o Adequacy of Consideration

    ; ?2512 the presence of consideration for purposes of contract law does not assure that

    the transfer will escape gift tax

    ; THE VALUE OF CONSIDERATION MUST BE EQUAL TO THE VALUE OF PROPERTY

    TRANSFERRED consideration must be reducible to money or money’s worth

    ; Reg. ?25.2512-8 states that even if the consideration is not objectively equal in value to

    the property transferred, the IRS will not assert gift tax liability if the transfer was made

    during the ordinary course of business.

    o Payment of Gift Tax as Consideration

    ; Donor parents may wish to transfer stock in a closely held family corporation, but may

    not wish to give up the necessary cash to pay the gift tax on the transfer in that event,

    the son or daughter may agree to pay the tax

    ; Because ?2503(c) imposes the primary obligation to pay the gift tax on the donor, the

    donee’s payment of the tax must be viewed as an offsetting benefit to the donor

    ; Therefore, the net gift that is taxable is the difference between the value of the property

    transferred and the amount of the donor’s gift tax obligation discharged by the donee

    ; The net gift may have income tax consequences as well

    ; In Old Colony Trust Co. v. Commissioner, the Supreme Court concluded that for

    income tax purposes there was a sale, and the amount realized by the donor was

    the amount of the donor’s tax obligation discharged by the donee which was

    taxable as a gain

    o Gifts of Encumbered Property

    ; Crane v. Commissioner held that a party who conveys property subject to a liability must

    be treated as receiving consideration in the amount of the liability because the transferee

    can be expected to discharge the debt

    o Political Contributions

    ; ?2501(a)(4) provides that any political organization is excluded from taxable gifts -NO

    limitation

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    ; Refers to ?527(e) which defines political organization as any committee, fund, or

    organization organized and operated primarily for the nomination, election, or

    appointment of an individual to federal, state, or local office

    When A Gift Occurs

    ; Introduction

    o If a donor retains control over the property either directly or indirectly completion of the gift

    may be prevented because the donor has the power to recall the property

    o Timing questions also arise when multiple steps are necessary to place full ownership in the donee

    ; Timing questions are important for determining if and when the gift tax applies

    ; Issue of Valuation: if the transfer did not constitute a completed gift during the

    decedent’s life, the asset purportedly transferred during life will generally remain part of

    the decedent’s gross estate for estate tax purposes and will therefore be subject to the

    estate tax

    ; Retained Control

    o Reserved Control: 25.2511-2(c): A gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title to the property in himself.

    ; Focus on the value of the property at the time the gift is completed; doesn't matter what

    it was worth when she initially put it in the trust

    ; Treat as if it was the donor’s up until she revokes control over the property as the gift tax

    is primarily concerned with the passage of economic benefits conferred at the time they

    were conferred

    ; If the donor can change the beneficial enjoyment among the beneficiaries, it is not a

    completed gift

    ; 25.2511-2(d): A gift is not considered incomplete, however, merely because the donor

    reserves the power to change the manner or time of enjoyment.”

    o Ability to Change Beneficiaries: 25.2511-2(c): A gift is also incomplete if and to the extent that a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves unless the power is a fiduciary power limited by a fixed or ascertainable standard

    ; Still an incomplete gift if he can change beneficiaries

    ; The case law and the regulations have held that the ability to control property constitutes

    sufficient control to justify saying that you still have enough involvement that you haven't

    made the gift

    ; Exception: if Mom names herself as the trustee and the document says that the trustee

    can change distributions among beneficiaries in accordance with fixed or ascertainable

    standards (for the health, support, or maintenance of the children)

    ; This limits the discretionary power of the trustee

    ; Not viewed as having retained control over the property

    ; Estate of Sandford v. Commissioner

    ; Holding: the gift cannot be complete as long as the donor retained the right to

    change beneficiaries.

    ; Retention of control over the disposition of trust property, whether for the

    benefit of the donor or others, renders the gift incomplete until the power is

    relinquished whether in life or in death

    ; Congress did not intend to tax gifts before the donor had fully parted with his

    interest in the property given

    ; Property transferred to trust subject to a power of control over its disposition

    reserved to the donor is required to be included in the gross estate

    o Partially Complete/Incomplete: 25.2511-2(b): But if a transfer or property (whether in trust or otherwise) the donor reserves any power over its disposition, the gift may be wholly incomplete,

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    or may be partially complete and partially incomplete, depending upon all the facts in the

    particular case

    ; Substantial Adverse Interest

    o If the grantor learns that her retention of control over a trust will have the effect of including the

    trust in her gross estate, she might seek to avoid this rule by requiring that another person

    acquiesce in the grantor's exercise of that control.

    o Avoidance of estate tax in these circumstances is prevented by ??2036(a)(2) and 2038(a)(1),

    which under certain circumstances, require inclusion of an asset in the decedent's gross estate if,

    at the date of death, the asset is subject to a power of disposition exercisable by the decedent

    either alone or in conjunction with any other person.

    ; 25.2511-2(e): "A donor is considered as himself having a power if it exercisable by him in

    conjunction with any person not having a substantial adverse interest in the disposition of

    the transferred property or the income therefrom."

    ; The gift will be considered complete and therefore taxable if the person holding power

    jointly with the donor has a "substantial adverse interest in the disposition of the

    transferred property or the income therefrom."

    o What is substantial adverse interest? (Commissioner v. Prouty)

    ; A substantial chance of coming into a good thing may constitute a "substantial adverse

    interest" especially where, as here, it is a chance to control the disposition of the entire

    corpus of a large estate

    ; If there exists a substantial adverse interest, the gift is complete at the time it was

    transferred into the trust, because there was no retained control by the donor o Camp v. Commissioner definition: If the trust instrument gives a designated beneficiary any

    interest in the corpus of the trust property or of the income therefrom, which is capable of

    monetary valuation, and the donor reserves no power to withdraw that interest, in whole or in

    part, except with the consent of such designated beneficiary, then the gift of that particular

    interest will be deemed to be complete, for the purposes of the gift tax

    ; If the only power reserved by the donor is a power to revoke the entire trust instrument,

    and this power may be exercised only in conjunction with a designated beneficiary who is

    given a substantial adverse interest in the disposition of the trust property or the income

    therefrom, then the transfer in trust will be deemed to be a present gift of the entire

    corpus of the trust, for purposes of the gift tax

    ; If the trust instrument reserves to the donor a general power to alter, amend or revoke,

    in whole or in part, and this power is to be exercised only in conjunction with a

    designated beneficiary who has received an interest in the corpus or income capable of

    monetary valuation, then the transfer in trust will be deemed to be a completed gift, for

    the purposes of the gift tax, only as to the interest of such designated beneficiary having a

    veto over the exercise of the power

    ; Informal Reservations: if the actual disposition of the property is in fact controlled by the oral

    understandings or other directions contrary to the documents, the facts -not the documents -will

    determine taxability

    ; Retention of the Power to Change Trustee

    o IRS Response: If the donor can replace the trustee with himself, it is clear that the trustee’s

    powers must be imputed to the donor, necessarily making the gift incomplete o Court Response (won’t attribute donor’s intentions to the trustee)

    ; Will not automatically say that just because the donor can change trustees, that all of

    their powers are attributable to the donor

    ; If the donor retains the power to replace the trustee with a person who is neither the

    grantor nor a person related or subordinate to the grantor (as defined in ?672(c)), the

    retention of such power will neither cause the transfer in trust to be an incomplete gift

    nor require exclusion of the trust property in the donor's gross estate

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    ; As long as she has not named herself or related or subordinate parties, then she is

    not considered having retained control merely because she has the power to

    change trustees

    ; 672(c) people: grantor’s spouse, father, mother, issue, brother, sister, employee

    of grantor, corporation or employee of corporation in which grantor holds

    significant voting control, subordinate member of a corporation in which the

    grantor is an executive

    o Keep in Mind: even if donor names herself as trustee, it does not mean she has retained the type

    of control that keeps the gift from being completed

    ; Promissory Notes

    o Revenue Ruling 84-25

    ; The gratuitous transfer of a legally binding promissory note is a completed gift under

    ?2511 of the code

    ; In the case of legally enforceable promise for less than an adequate and full consideration

    in money or money’s worth, the gift is complete under 2511 on the date the promise is

    binding and determinable in value rather than when the promised payment was actually

    made

    ; The amount of the gift is the fair market value of the contractual promise on the date that

    it is binding

    o Hypothetical: mom gives son promissory note in 2011 to pay $50,000 in 2014 ; If the promissory note is legally enforceable, the gift is made at the time the note is

    delivered

    ; The gift is the value of the transfer of the legally enforceable note

    ; Since $50,000 three years from now will be less than $50,000 today, the fair

    market value of the gift is valued at slightly less than $50,000

    ; Whether a promissory note is legally enforceable depends on relevant state law (Bosch)

    ; If it is not legally enforceable, then the gift occurs when the money is actually

    conveyed

    ; In this case, the value of the gift would be $50,000

    ; Must know relevant state law to know whether the note was legally enforceable

    at the time of transfer

    ; Checks

    o When does the giving of a check become a completed gift?

    ; Reg. 25.2511-2(b) provides that a gift is complete only when the donor has put the

    property beyond the donor’s “dominion and control”

    ; Under typical state law, the donor has the power to stop payment of the check at any

    time until the check is actually accepted and paid by the drawee bank

    o Revenue Ruling 96-56

    ; The IRS stated that the delivery of a check to a noncharitable donee will be deemed a

    completed gift on the earlier of (1) the date on which the donor has so parted with the

    dominion and control under local law as to leave in the donor no power to change its

    disposition, or (2) the date on which the donee deposits the check (or cashes the check

    against available funds of the donee) or presents the check for payment if it is established

    that:

    ; (1) The check was paid by the drawee bank when first presented to the drawee

    bank when first presented to the drawee bank for payment

    ; (2) The donor was alive when the check was paid by the drawee bank

    ; (3) The donor intended to make a gift

    ; (4) Delivery of the check by the donor was unconditional

    9

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