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Subject:  Re: Gifting Private Company Stock Date:  9/5/2000  5:27 PM
Author:  criser Number:  39568 of 127613

But I think you could have an even worse result. If the stock certificates are restricted and therefore the simultaneous transaction precludes the charity's holding unfettered title to the stock, this would be deemed a step transaction. The entire proceeds would go to the charity and you would be deemed to have sold the stock and gifted the cash. You would be liable for the tax. That's ugly. This would be true even if the CFO papered the transaction your way. That's because the charity did not receive the stock unconditionally. I haven't researched this question but believe that you would want to seek a substantive legal opinion or a CPA's written opinion with authority supporting a positive conclusion.

I agree that this is a big risk. This is a textbook case for application of the step transaction doctrine - a situation where two or more steps are collapsed into one that produces the substantive result (as opposed to the result in form).
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