Haygood v. Commissioner
United States Tax Court
42 T.C. 936 (1964)
- Written by Daniel Clark, JD
Facts
Selsor Haygood owned real-property interests worth approximately $32,500. Haygood wished to gift the interests to her two sons, bit by bit, over the course of several years. Haygood sought the assistance of a lawyer to structure the transfer. Pursuant to the lawyer’s structure, Haygood transferred $16,500 of the real-property interests to one son and the remaining $16,000 to the other. The sons took the property subject to vendor’s liens and granted Haygood vendor’s-lien notes with face values equal to those of the transferred-property interests. The notes were payable in annual installments of $3,000 and bore no interest. Haygood intended to forgive each payment as it became due, and her sons were aware of her intention. The Internal Revenue Service (IRS) (defendant) determined that because of Haygood’s intention to not collect on the notes, the notes had no value. Accordingly, the IRS further determined that Haygood made a taxable gift of $32,500. Haygood petitioned the tax court and challenged the IRS’s determination.
Rule of Law
Issue
Holding and Reasoning (Scott, J.)
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