Maggos

MEMORANDUM **

Mary Maggos’s estate claims that the IRS should not have assessed a gift tax on Mary’s stock redemption because the redemption is reseindable under Illinois law. Alternatively, the estate claims that the gift tax amount assessed was too great because the Tax Court failed to take into account the settlement proceeds from the federal district court litigation. We affirm on the first claim and remand on the second.

1. Incomplete Gift Argument

Mary’s estate argues that the stock redemption is reseindable under Illinois law because Nikita breached his fiduciary duty as a trustee when he purchased trust property — namely the 567 shares of PCAB stock. This argument fails because the 567 PCAB shares were owned by Mary in her individual capacity when she redeemed them. The 567 shares of PCAB stock were taken out of the trust (by both Mary and Nikita as co-trustees) and transferred to Mary in her individual capacity prior to the stock redemption transaction. Because the shares were owned by Mary when they were redeemed, Nikita never purchased trust property.

Likewise, we also reject the various other arguments the estate offers to suggest that the transaction would be…