Authored by John Walker and Chris D. Treharne, ASA, MCBA, BVAL of Gibraltar Business Appraisals, Inc. a member firm of FCG Issue 14:1
Joanne M. Wandry, Donor, Petitioner V. Commissioner Of Internal Revenue, Respondent, Albert D. Wandry, A.K.A. A. Dean Wandry, Donor, Petitioner V. Commissioner Of Internal Revenue, Respondent
T.C. Memo. 2012-88, Docket Nos. 10751-09, 10808-09, Judge: Hon. Harry Allen Haines, Filing date March 26, 2012
In an important gift tax case involving transfers among family members, the Tax Court determined that transfers of closely-held business interests were specific dollar amount transfers rather than transfers of fixed percentage interests. Further, the court ruled that the Petitioners intent was not contrary to public policy and their transfer documents were not void for federal tax purposes.
The Wandry ruling has the potential to be a landmark case that provides taxpayers and planners with exceptional guidance on the use of formula gifts between family members. The ruling also carefully identifies the differences between “defined value” and “savings” clauses.