Contents

ESTATE AND GIFT TAX CONSIDERATIONSThe criteria establishing the essential characteristics of a gift do not take intoaccount the objective or subjective gratuitousness in the transfer. Neither intentionnor motivation is a governing factor. If any transfer is made for less than fulland adequate consideration, it is deemed a gift if all the other criteria are present.If, however, as of the date of a gift a transfer for charitable purposes isdependent on the performance of some act or the happening of a precedentevent to become effective, a gift tax charitable deduction is not allowable unlessthe possibility that the charitable transfer will not become effective is so remoteas to be negligible. 6 Further, if an interest has passed to, or is vested in, a charitableorganization on the date of the gift and the interest would be defeated by theperformance of some act or the happening of some event, the possibility ofoccurrence of which appeared on that date to be so remote as to be negligible, thegift tax charitable deduction is allowable. 7 These rules are the same as those usedfor determining whether the income tax charitable contribution deduction isallowable under similar circumstances, 8 and whether the estate tax charitablecontribution deduction is allowable under similar circumstances. 9(b) Imposition of Gift Tax in GeneralUnder federal gift tax law, a tax is imposed “on the transfer of property by giftduring [the] calendar year by any individual.” 10The federal gift tax applies generally to all individuals, whether they are residentsor nonresidents of the United States. 11 Special rules apply throughout thegift tax area to nonresidents and nonresidents who are not citizens of the UnitedStates. Corporations and other artificial entities are not subject to the tax.A U.S. citizen who resides in a U.S. possession is considered a citizen. 12 If,however, an individual acquired U.S. citizenship solely by being a citizen of thepossession, or birth or residence in the possession, he or she is considered a nonresidentand not a citizen of the United States. 13(c) Scope of Covered Transfers and PropertyGenerally, all property of every kind is included within the scope of the tax. Itapplies to real or personal, tangible or intangible property. 14 It applies to propertysituated inside or outside the United States. 15 Only transfers of property situatedwithin the United States, however, are covered in the case of a nonresidentwho is not a citizen of the United States.6 Reg. § 25.2522(c)-3(b)(1).7 This rule of law was applied by the IRS in Priv. Ltr. Rul. 9303007, in which the IRS found that the conditionswere so remote as to be negligible.8 See § 10.4(b).9 See § 8.3.10 IRC § 2501.11 IRC § 2501(a)(1).12 IRC § 2501(b).13 IRC § 2501(c).14 IRC § 2511(a).15 Id. 226