Diedrich v. Commissioner

Facts of the Case

In two separate cases, individual taxpayers made a gift of property on condition that the donee pay the resulting gift tax. In both cases the Commissioner of Internal Revenue determined, after an audit, that the taxpayers had realized taxable income to the extent that the gift tax paid by the donee exceeds the taxpayer’s adjusted basis in the property transferred. The taxpayers filed petitions in the United States Tax Court for redetermination of deficiencies. The Tax Court held for the taxpayers, concluding that no income had been realized. The United States Court of Appeals for the Eighth Circuit consolidated the two appeals and reversed, concluding that to the extent the gift taxes paid by the donees exceeded the donors’ adjusted bases in the property transferred, the donors realized taxable income.





Case Information

Citation: 457 US 191 (1982)
Argued: Feb 24, 1982
Decided: Jun 15, 1982
Case Brief: 1982