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FEDERAL INCOME, ESTATE & GIFT TAX PROJECT 1 (TENTATIVE DRAFT 9, AGENDA FOR DISCUSSION, May 1954)

handle is hein.ali/aliftp0283 and id is 1 raw text is: THE AMERICAN LAW INSTITUTE

FEDERAL TAX PROJECT
AGENDA FOR DISCUSSION
TENTATIVE DRAFT No. 9 ESTATE AND GIFT TAXES
MAY, 1954
THE GIFT TAX
I. NoN-TAXABLE TRANSFERS
Section X1006(a) is similar to present law in that it defines a
.gift as a transfer of property for a consideration whose value is less
than the value of the property transferred. This approach raises
several problems because it looks only to the amount of consideration
-received by a transferor of property, and notto the reason for the
transfer. For example, how shall commercial transactions and trans-
'fers for support purposes be treated? These problems are dealt with
;in sections which provide that certain transfers are non-taxable, being
either excluded from gifts or deducted from the amount of gifts in
.,computing net gifts.
A. Commercial Transfers. -The Draft provides that a transfer
relating to the gainful activity of one or more of the parties shall be
excluded from gifts unless it is clearly proved that the predominant
motive for the. transfer was donative intent. But this rule does not
apply to transfers between close relatives or organizations controlled
by them because of the possibility that when close relatives are in-
volved the commercial context will be used to disguise transfers moti-
vated by donative intent.
B. Support Transfers and the Per Donee Exclusion.-The Draft
treats support transfers and the per donee exclusion as follows:
1. Exclusion of Some Support Transfers from Gifts.-Sec-
tion X1007 (f) provides that some support transfers are excluded
from the concept of gifts. The purpose of excluding these trans-

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