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§ 3.1 MEANING OF GIFTevents, rather than formalities . . . must govern . . . [the] determination ofwhether an anticipatory assignment of income occurred.” 184A court opinion illustrated the sometimes narrow difference between thetwo types of transfers. A federal district court ruled that a gift to a charitableorganization of the long-term capital gains in certain commodity futures contractsgave rise to a charitable contribution deduction for the transfer of thatproperty, and that the transaction was not an anticipatory assignment ofincome. 185 The case turned on the court’s finding that the donor did not retaincontrol over the timing of the sales of the futures contracts by the recipient charitableorganization.The case concerned an individual who formed a charitable organization inthe early 1970s and had been president of it since it was established. The organizationhad a board of trustees which, the court concluded, the founder did notcontrol. From time to time, the founder contributed futures contracts to the organizationand claimed charitable contribution deductions for these transfers.Indeed, in 1974, he obtained a private letter ruling from the IRS holding that thecontributions gave rise to charitable contribution deductions for the value of thefutures contracts and that he need not recognize any gain when the organizationsold the contracts. In 1981, however, the federal tax law changed. Beginningwith that year, all commodities futures contracts acquired and positions establishedhad to be marked to market at year-end, and the gains (or losses) had tobe characterized as being 60 percent long-term capital gains (or losses) and 40percent short-term gains (or losses), regardless of how long the contracts hadbeen held. 186 This law change posed a problem for the donor, because the charitablededuction for a gift of short-term capital gain property is confined to thedonor’s basis in the property; 187 there is no deduction for the full fair marketvalue of the property (as there is for most gifts of long-term capital gain property.188 ) He decided to solve the problem by donating to the organization onlythe long-term gain portion of futures contracts. In 1982, this individual enteredinto an agreement under which he contributed to the charitable organization thelong-term capital gains of selected futures contracts from his personal accountsat a brokerage house and retained for himself the short-term capital gains. Forthe most part, the selected contracts were sold on the same day that the gift wasmade and the portions of the proceeds representing the long-term capital gainswere transferred to an account of the organization at the same brokerage house.The donor chose the futures contracts to be donated according to the fundingneeds of the organization and the amount of unrealized long-term capital gainsinherent in them. Once the contracts were transferred to a special account, theywere to be sold, pursuant to a standing instruction.On audit for 1982, the IRS took the position that the full amount of the capitalgains on the sales of these contracts was includable in this individual’s taxable184 Peterson Irrevocable Trust No. 2 v. Commissioner, 51 T.C.M. (CCH) 1300, 1316 (1986), aff’d, 822 F.2d 1093(8th Cir. 1987).185 Greene v. United States, 806 F. Supp. 1165 (S.D.N.Y. 1992).186 IRC § 1256(a)(3).187 IRC § 170(e)(1)(A). See § 4.4(b).188 See § 4.3. 83