Section of Taxation Publications
  VOL. 55
NO. 2
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.

Gift or Sale? A Question of Intent in Estate of Costanza v. Commissioner
James A. Bulen, Jr.


In the recently decided case Estate of Costanza v. Commissioner, the Tax Court held that intra family transfers are presumed to be gifts absent convincing evidence to the contrary. This case involved the transfer of real property between the taxpayer and his son in exchange for a self-canceling installment note (SCIN). Following mixed precedent, Costanza held that courts should inquire beyond the formal requirements of an intrafamily sale to the substance of a transaction to determine whether the transfer was a valid sale. Here, the court determined that the taxpayer failed to rebut the presumption that the transfer in question was a gift, because the transaction was effectuated in a haphazard manner.

Part I of this Note describes the background of the Costanza case. Part II discusses the court’s holding. Part III addresses precedent regarding intrafamily transfers and revisits the Costanza decision. Part IV discusses the Costanza decision’s implications for tax practitioners. Part V concludes that, while the Costanza court correctly held that intrafamily transfers in exchange for an installment obligation are presumed to be gifts, it decided the case incorrectly on its merits.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


If you are an ABA member, you can receive The Tax Lawyer and the Section NewsQuarterly, both quarterly publications, when you join the Section of Taxation. Anyone can subscribe to The Tax Lawyer by contacting the ABA Service Center.