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GIFTS OF MONEY AND PROPERTYand sales could be viewed as step transactions encompassed within a unifiedplan.” 74As this case illustrated, the question posed by the step transaction doctrineinvolves the relationship among various seemingly independent transactions. Inthis case, the question was: How related were the decisions to sell the futurescontracts to the contribution of them? Had some prearrangement existed bywhich the individual donated selected contracts to cover the charitable organization’soperating expenses, and had he received in return short-term gains withouthaving to pay taxes on the full amount of the futures contracts, the transferscould have been viewed as a step transaction within a larger plan. In this connection,one court held:If, by means of restrictions on a gift to a charitable donee, either explicitly formulatedor implied or understood, the donor so restricts the discretion of thedonee that all that remains to be done is to carry out the donor’s prearrangedplan . . . for designation of the stock, the donor had effectively realized thegain inherent in the appreciated property. 75As to this case, the individual claimed that the sales were not prearrangedbut rather were the prudent acts of the trustees of a charitable organization inneed of operating funds. The IRS argued that the standing instruction reflected aprearranged plan to use the charity to sell the futures contracts, cover its needswith the long-term gains, and enable the individual to keep the short-term gainswithout having to pay taxes on the entire proceeds of the sale. The court heldthat there was no evidence to suggest that the individual was the source of thestanding instruction and thus that his control over the sale of the contracts wasnot such that the contributions and sales could be viewed as step transactionsencompassed within a unified plan.In a similar case, a court held that contributions of appreciated futures contractsto a charitable organization controlled by an individual did not result inincome to the individual when the contracts were sold shortly after they hadbeen donated. 76 The court dismissed the importance of control between the businessand the recipient charitable organization and the fact that everyoneinvolved anticipated that the gifted property would be sold or otherwise liquidated.Wrote the court: “Only through such a step could the purpose of the charitablecontribution be achieved.” 77In another instance, an individual made annual gifts, for 10 consecutiveyears, to a university of closely held stock in a corporation of which he was themajority shareholder, an officer, and a director. He retained a life interest in thegift property and confined his charitable contribution deduction to the value ofthe remainder interest. Each year, the university tendered stock to the corporationfor redemption; each year, the corporation redeemed it. There was no contractevidencing this cycle of events. The university invested the redemptionproceeds in income-producing securities and made quarterly disbursements tothe donor.74 Id. at 1173.75 Blake v. Commissioner, 697 F.2d 473 (2d Cir. 1982), aff’g 42 T.C.M. (CCH) 1336 (1981).76 S.C. Johnson & Son, Inc. v. Commissioner, 63 T.C. 778 (1975).77 Id. at 780. 140