Reply To: Would this come under Step Transaction Doctrine

Home Fairmark Forum Other Tax Topics Would this come under Step Transaction Doctrine Reply To: Would this come under Step Transaction Doctrine


Hello Kaye.. Thanks so much for your thoughts. Let me be the first one to ask a follow up too!

Obviously I had my doubts and hence my question in the first place.

That said, I can see how this can be argued that it is perfectly legal. My thinking is as follows.

1) Crummey Trusts are an accepted (litigated and probably grudgingly tolerated) strategy, whereby 30+ days of unfettered control of gifted amount constitutes a current and completed gift.

2) The original donor himself can donate to the DAF and get a legal charitable deduction, even though retains control. That has already been blessed by the IRS and donating to DAF is a legitimate charitable deduction.

3) As to the last remaining obstacle of B receiving the deduction as a benefit: I don’t see why this should be an issue as:
a) any gift can be further donated to generate charitable deduction, and
b) There is nothing inherently wrong in A intending to donate the “option of charitable deduction” as an associated benefit along with the original gift to B.

The above three points combined together would lead me to believe this should pass muster — although the burden of the argument may be on us.

btw: My login-id reference is my goal to asymptotically approach the ideal goal of zero taxes — as in Romney’s reference; not necessarily because I am a fan of his! Aren’t we all aiming for that goal?!