Saturday, March 6, 2021
Harlee Havens (J.D. 2022, Kentucky), A Call to “Detach” from the Strict Interpretation of the Duberstein Standard, 109 Ky. L. J. Online (2021):
In order to try to aid in the determination of whether or not something is a gift for tax purposes, Kahn and Kahn suggest that the transferee’s role or actions should be considered as well because it acknowledges that certain circumstances depend more on the actions of the transferee than the intention of the donor [Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), “Gifts, Gafts, and Gefts” – The Income Tax Definition and Treatment of Private and Charitable “Gifts” and a Principled Policy Justification for the Exclusion of Gifts from Income, 78 Notre Dame L. Rev. 441, 478 (2003)]. By also looking to the acts of the transferee, courts would no longer have to rely solely on the donor’s intention, which as suggested, can be understood in a way that renders the exclusion useless.
While the “detached and disinterested” standard from Duberstein has been widely understood as the leading standard, it still has flaws in interpretation. With the exclusive focus on the intention of the donor, there is room for this determination to be inconsistently made on the basis of a judge’s cynicism. The proposal of also considering the transferee’s actions would allow for attention to be paid to facts other than just what the donor intended.