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§ 3.1 MEANING OF GIFTand overwhelmingly approved. Thereafter, the company obtained approvalfrom the department of insurance in the state in which it operated for the issuanceof reinsurance agreements, and for the sale of goodwill and fixed assets toanother insurance company. The directors of the company then approved severalliquidation arrangements and authorized notification to the stockholdersthat the first liquidating dividends would be exchanged for stock later that year.After the liquidation arrangements were approved and before the liquidatingdistributions began, one of the stockholders contributed stock in the corporationto various public charities. The distributions were subsequently made asplanned, and the process of liquidation was soon thereafter completed. Thestockholder claimed a charitable contribution deduction for the gift of the stock.The IRS allowed the charitable deduction but, viewing the transactions as anticipatoryassignments of income in the form of the liquidation proceeds, taxedthe donor on the income subsequently paid to the charities (equivalent to thelong-term capital gain generated by the liquidation). A court upheld the IRS’sposition. 193The outcome of this case turned on the likelihood of completion of the liquidationproceedings. The lower court found that the shareholders of the companycould have abandoned the liquidation proceedings after these gifts were madeand thus that the contribution should not be treated as an anticipatory assignmentof the liquidation proceeds. The appellate court, however, decided that,under the facts, the “realities and substance” rather than “hypothetical possibilities”of the matter showed that the donor expected the liquidation proceedingsto be completed and that the likelihood of rescission of the proceedings wasremote. 194 The fact that the donor was not a controlling shareholder of the liquidatingcompany was not “pivotal” to the court’s determination. 195A comparison of these two cases shows how fine the line of demarcation inthis area can be. In the more recent of the two cases, control was the determiningfactor; in the other, control was “only one factor” in the determination. 196 In themore recent case, the donor was found not to know with “virtual certainty” thatthe contracts would be sold, but only to have had knowledge that gains from thesales were a “reasonable probability.” 197 There is little distinction between “reasonableprobabilities” and “realities and substance.”When control is clearly present, however, the courts are far more likely toconclude that there has been an anticipatory assignment of income. Thus, in onecase, a majority stockholder in a closely held corporation donated part of hisholdings to nine charitable organizations approximately nine months after the193 Jones v. United States, 531 F.2d 1343 (6th Cir. 1976), overruling Jacobs v. United States, 390 F.2d 877 (6thCir. 1968).194 Id., 531 F.2d at 1345–46.195 Id. at 1346, n. 3.196 Id. at 1346.197 Greene v. United States, 806 F. Supp. 1165, 1169 (S.D.N.Y. 1992). This case was affirmed in an opinion containingan extensive discussion of the anticipatory assignment-of-income doctrine as it applies in the charitablegiving setting. 13 F.3d 577 (2d Cir. 1994). In subsequent unsuccessful litigation, the IRS attempted tocause denial of the charitable deduction on the ground that the gift was an unqualified gift of a partial interestin property (see § 9.23) and cause the realization as income of the capital gain inherent in the gifted property(see § 9.11). 85