b.    Gifts and Bequests
1.    code: 102, 1014(a)(1), 1015; Reg. 1.102-1(a), (b), (c); Prop. Reg. 1.102-1(f)(2)
ii.    Introduction:  102 excludes from GI the receipt of gifts, bequests, devises, and inheritances.
1.    gifts sometimes can be hard to classify.  Neither the code nor the regs define the term “gift.”
a.    102(c)(1):  “omits,” except as otherwise provided, is very tough on this rule.
b.    the Duberstien Court (the seminal case) stated: “[A] gift is a payment or transfer
i.    Made out of “detached and disinterested generosity” (Ascher says that this is the catch phrase to remember)
ii.    Made out of affection, respect, admiration, charity, or like impulses;
iii.    Not made primarily from the constraining force of any moral or legal duty
iv.    Not made from the incentive of anticipated benefit of an economic nature, &
v.    Not made in return for services rendered
c.    the focus in determining whether p payment is an excludable gift or includable income is on the donor’s intent or motive in transferring the property to the recipient.  This determination depends upon the facts and circumstances of the case.
d.    within the family context, gifts are fairly easy to assume, generosity is expected.
e.    gifts within the commercial context becomes murky, this is to avoid the possible exclusion of GI under the guise of a gift
f.    102(c) safeguards against this abuse in the E/E relationship.
g.    gifts bequests devises and inheritances are windfalls to the recipiant.  These are taxable under the separate system of estate and gift tax
h.    Note: 102(b) exclusion does not apply to income subsequently earned from the fits or devised property.
i.    Note: when something is exchanged and the compensation received is less than the FMV of the item, the compensation is deemed GI from a sale or exchange; however, the amount in excess of the compensation and below the FMV is deemed to be a gift
j.    Oak v. United States:  “tokes” received by a craps dealer in Vegas are like tips and not considered a “gift” and are not deductible under 102.
k.    gifts v. compensations-p. 132, states that even if the gift is ‘inter-family’ there can still be GI found.  Altman v. Commissioner (1973):  Mother is blackmailed by son, = GI; Wolder v. Commissioner (1974): Money left to an attorney who prepared a tax plan for a client, the money left in the will was deemed payment for services and, therefore, compensation and GI