Opinion ID: 590008
Heading Depth: 2
Heading Rank: 3

Heading: The 1981 Transfer of Stock To The Trust

Text: 19 We find no merit in the taxpayer's argument that the transfer of the stock to the trust in 1981 was a completed gift. The taxpayer relies on Revenue Ruling 77-378 (1977). In Revenue Ruling 77-378 a completed gift was found when the grantor created an irrevocable trust, with the corpus to be distributed to the grantor's spouse and children upon the grantor's death. The trust agreement empowered the trustee to distribute income and corpus to the grantor during the grantor's lifetime in the trustee's absolute and uncontrolled discretion. The grantor had no power to direct the trustee to distribute income or corpus to him. 20 The fundamental difference between the trust involved in Revenue Ruling 77-378 and the trust involved in this case is that in this trust the holders of the beneficial certificates were entitled to the distribution of the trust corpus at the termination of the trust. All of the certificates were initially vested by the trust agreement in Joseph A., the grantor. Nothing in the trust agreement or otherwise required Joseph A. to transfer any of those certificates to anyone else. 2 Accordingly, Joseph A. retained the ability to revest the beneficial title to the property in himself within the meaning of § 25.2511-2(c) by simply not giving up any of the certificates. Cf. Treas. Reg. § 25.2511-2(b) (For example, if a donor transfers property to another in trust to pay the income to the donor or accumulate it in the discretion of the trustee, and the donor retains a testamentary power to appoint the remainder among his descendants, no portion of the transfer is a completed gift.). If Joseph A. had retained all of the certificates, the trustees would not have had the power under the terms of the trust to distribute income or corpus to anyone but him. 21