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FUNDAMENTAL CONCEPTSincome. The IRS also disallowed the charitable contribution deductions for thatyear and prior years. The IRS’s position rested on two arguments, one of whichwas that the transfers of portions of the gain to the organization were taxableanticipatory assignments of income. 189The anticipatory assignment rationale had this individual not making giftsof the futures contracts but, instead, giving to the charity money in an amountequal to 60 percent of the contracts sold; he was characterized as receiving thegain and then diverting a portion of it to the organization in an attempt to shieldhimself from tax liability. The government contended that the organization didnot bear any risk in the commodities market, but was simply the recipient of anassignment of the realized long-term capital gains. By contrast, the individualcontended that the assignment-of-income theory was inapplicable because nocontract for the sale of the property was in existence before the donation wasmade. His argument was that his right to receive at least some of the proceedshad not matured to the point where a gain from the sale should be deemed to behis income. He argued that he neither controlled the value of the donated interestsnor retained any legal right to receive any matured unrealized long-termcapital gains that might be realized on sales of the futures contracts.The court was somewhat troubled by the fact that, as both a director and thepresident of the organization, as well as the one who timed the initial transfers,this individual appeared to be in a position to ensure that the futures contractswould be sold immediately and that the short-term gains would flow to him atthe time of his choosing, while taxes on the long-term gains were avoided. Thecourt conceded that the “retention of the short-term gains gave the transactionmore the appearance of an income assignment.” 190 Nonetheless, the pivotal anddeciding issue involved the standing instruction and this individual’s influenceover it. The evidence showed that the decision to shift contracts to the specialaccount was that of the full board of trustees of the organization and not its president.Thus, the court held that this individual did not have control over the timingof the disposition of the futures contracts once they were transferred to thespecial account of the charitable organization. The court ruled that “the donationof the contracts’ long-term capital gain, while less tangible than many otherforms of gifts, should still be considered a donation of the property.” 191 The courtalso held that this individual’s “donations of their [the contracts’] long-term capitalgain should not properly be considered an anticipatory assignment ofincome.” 192 Under the court ruling, the donor was not taxable on the long-termcapital gain contributed to the foundation, and the charitable deduction wasupheld.An earlier case also illustrated application of the assignment-of-income doctrine.Under the facts of that case, the directors of an insurance companyadopted a plan of liquidation, which the corporation’s stockholders promptly189 The other argument was that the gains on the sales of the futures contracts were taxable by reason of the steptransaction doctrine. See § 4.8.190 Greene v. United States, 806 F. Supp. 1165, 1170 (S.D.N.Y. 1992).191 Id. at 1172.192 Id. 84