Holtz's Estate v. Commissioner

38 T.C. 37 (1962)

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Nature of the Case

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Facts

Settlor created an inter vivos trust. During his lifetime, the income from the trust was to be paid to Settlor, as was that portion of the principal which the trustee deemed to be desirable for the Settlor's comfortable support, or his emergency needs. Upon Settlor's death, the income was payable to his wife for her life, if she survived him, and it contained a similar provision with respect to invasion of the principal for her benefit. Upon the death of both Settlor and his wife, the trust was to terminate, and the income distributed to the survivor's estate. During his life, Settlor transferred assets into the trust. The Commissioner (D) determined that these constituted taxable gifts, and assessed a tax against Settlor based on the amount of the transfer, less Settlor's interest in the trust. Settlor's estate (P) contends that the transfers were not completed gifts at the time they were made, and were therefore not taxable to Settlor as gifts.