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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-