McDonald v. Commissioner
United States Court of Appeals for the Eighth Circuit
853 F.2d 1494 (1988)
- Written by Tom Squier, JD
Facts
Gladys McDonald (plaintiff) and John McDonald were a married couple who owned property as joint tenants with rights of survivorship. John died in January 1981. In September 1981, Gladys disclaimed her survivorship interest in the property, so that the property passed to the couple’s children. The Internal Revenue Service (IRS) (defendant) determined that Gladys should have reported the value of the disclaimed property on a gift-tax return. The IRS took the well-established position that a disclaimer of property was a taxable gift unless an exception applied and that no exception applied because Gladys’s disclaimer was untimely. The IRS cited Treasury Regulation § 25.2511-1(c), which applied to transfers made before 1977, and which limited the exception for disclaimers to those made in a reasonable time. The IRS used the date that the joint tenancy was created, sometime prior to 1977, as the date of the transfer, and declared that Gladys’s 1981 disclaimer was too late. Gladys petitioned the United States Tax Court for relief, but the tax court held in favor of the IRS. Gladys appealed and argued that the correct Treasury Regulation to use was § 25.2518, which applied to transfers made after 1976, and which tested timeliness based on the date of death of the decedent.
Rule of Law
Issue
Holding and Reasoning (Wollman, J.)
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