A Tax Court has recently held In Redstone v. Commissioner that a 1972 transfer of stock was made in the ordinary course of business for full and adequate consideration. The court’s ruling means that the transfer was not a gift for federal gift tax purposes. This article discusses the crucial details of the case and the reasoning behind the tax court’s decision. The tax court had to consider whether the parties to a settlement agreement were settling a genuine dispute, and were not colluding to make the transaction appear to be something else. According to the Court all the elements of an “arms-length” transaction existed in this case. In order for a gift to be treated as being made “in the ordinary course of business,” it must be free from donative intent.
See Dawn S. Markowitz, Estate Tax Not Liable for Gift Tax, Wealth Management, October 28, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
