Recipient Child Spouse Relative 3P Trust

Is there a transfer? transfer = any transaction in which an interest in property is gratuitously passed or conferred upon another; regardless
of means or device employed. §2511-1(c)(1)

Was there a gift? §2501 imposes a tax on “the transfer of property by gift.”
The combination of §§2501 and 2512(b) create the basic definition of a gift as:
(1) a transfer

(2) of property

(3) without adequate and full consideration

(a) donative intent is not relevant. §2511-1(g)
(b) marriage is consideration. Wemyss
(c) specifically, not a gift: (i) personal consumption and economic waste; (ii) arm’s length transactions; (iii) political
contributions; (iv) transfers mandated by law; (v) divorce-related transfers; (vi) direct payments for education and
Medicare care
(d) buy-sell agreements/option agreement effect on valuation ignored unless: (i) bona fide business arrangement; (ii)
not a device to transfer to members of decedent’s family for less than full and adequate consideration; and (iii) terms
are comparable to similar arrangements entered into by persons at arms length. §2703
(e) valuation for purpose of consideration = the price at which such property would change hands between a willing
buyer and willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge
of relevant facts. Reg. §2512-1

(4) in money or money’s worth.

What form is the gift The gift tax applies to transfers whether indirect or direct, in trust or otherwise §2511
in? -transfers in trust
-indirect gifts through a strawman
-gifts by corps
-discharge of indebtedness
-below market interest rate loans §7872—two imputed transfers: (1) lender = gift (difference between stated interest
and AFR) (2) borrower = discharge of indebtedness income
-use of money (without interest) = gift Dickman
-providing services without charge ≠ gift Hodges
Is it complete?
Donor must
relinquish dominion
and control over the
trust property—as to
leave him no power
to change its
disposition. §2511-
2(b)
What is the value of
the property
transferred?
Any exclusions or
deductions?
Type of Property Includability into gross Value Deductions
estate
Property Life estate
owned Life estate
entirely by for life of
D another

Property
co-owned
by D
Property
not owned
by D