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Revenue Ruling

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 Rev. Rul. 56-86

1956-1 C.B. 449

Full Text

Rev. Rul. 56-86

Under a statute adopted by the State of Colorado and a number of other states, securities, other than those in bearer form, transferred to a minor donee pursuant to an express provision thereof, are required to be registered in the name of the donor, the name of any adult member of the minor's family, or in the name of the minor's guardian as custodian for the minor. Securities in bearer form must be delivered to an adult member of the minor's family, other than the donor, as custodian, accompanied by a deed of gift. Under the provisions of such statute, a transfer of securities to a minor donee in the manner prescribed therein irrevocably conveys to the minor indefeasibly vested legal title to the securities. The custodian is authorized to apply so much of the income or principal of the property held by him, as custodian, for the support, maintenance, education, and general use and benefit of the minor, in such manner, at such time, and to such extent as he, in his sole discretion, deems suitable and proper. Any property and the income thereof not so expended shall be delivered or paid to the minor upon the minor's reaching the age of 21 years. If the minor dies before reaching the age of 21 years, the property and accumulated income therefrom is to be delivered to the minor's estate. Held , a transfer of securities to a minor donee pursuant to the statute adopted by the State of Colorado constitutes a completed gift for Federal gift tax purposes at the time the transfer was made. Held further , such gifts come within the purview of section 2503(c) of the Internal Revenue Code of 1954 and, therefore, qualify for the annual gift tax exclusion authorized by section 2503(b) of the Code. Compare Revenue Ruling 54-400, C.B. 1954-2, 319, which held that a gift of property does not constitute a gift of a future interest merely because the donee is a minor. The income tax consequences of such a transfer are still under consideration by the Internal Revenue Service.