Cornelius A. Ross, and Effie H. Ross v. Commissioner of Internal Revenue

Appellants Cornelius Ross and his surviving wife, Effie, seek review of the judgment of the United States Tax Court sustaining the Commissioner’s assessment of $21,084.28 in delinquent gift taxes against each of them. We affirm the judgment of the tax court sustaining the deficiencies.

I

In 1972, appellants transferred property to each of their ten minor grandchildren, employing three trust instruments containing substantially identical dispositive provisions. Each cestui que trust was given a power of appointment over his share of the trust fund, exercisable by will, in favor of “such person or persons among the Trustor’s descendants and their spouses, including such child’s own spouse, in such manner as such child may appoint by will. . . . ” In default of the exercise of this power, “such fund should be distributed to such deceased child’s heirs at law.”

Appellants filed gift tax returns for 1972 in which they claimed multiple gift tax exemptions of $3,000 for their gifts to each grandchild. It is not disputed that in order to qualify for a gift tax exemption, the transfers must satisfy the requirements of 26 U.S.C. § 2503 (c). Here, the issue is whether the trust provisions…