Susie Salvatore v. Commissioner
United States Tax Court
29 T.C.M. 89 (1970)
Susie Salvatore (plaintiff) inherited a valuable oil and gas service station from her late husband, which her children operated; in 1963, after Texaco offered to buy the property and the family agreed Salvatore would take half the profits with her five children splitting the rest, Salvatore deeded half her interest in the property to her children just before the entire property was conveyed to Texaco. On her tax return, Salvatore reported only her one-half share of the capital gain, while separately filing a gift-tax return for the one-tenth interests deeded to each child; the Commissioner (defendant) determined she was liable for tax on the entire gain from the sale.
Whether a taxpayer can shift tax liability for gains on the disposition of property by using another person as a conduit through which to pass title.