[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR25.2512-8]

[Page 549]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 25_GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954--Table of Contents
 
Sec.  25.2512-8  Transfers for insufficient consideration.

    Transfers reached by the gift tax are not confined to those only 
which, being without a valuable consideration, accord with the common 
law concept of gifts, but embrace as well sales, exchanges, and other 
dispositions of property for a consideration to the extent that the 
value of the property transferred by the donor exceeds the value in 
money or money's worth of the consideration given therefor. However, a 
sale, exchange, or other transfer of property made in the ordinary 
course of business (a transaction which is bona fide, at arm's length, 
and free from any donative intent), will be considered as made for an 
adequate and full consideration in money or money's worth. A 
consideration not reducible to a value in money or money's worth, as 
love and affection, promise of marriage, etc., is to be wholly 
disregarded, and the entire value of the property transferred 
constitutes the amount of the gift. Similarly, a relinquishment or 
promised relinquishment of dower or curtesy, or of a statutory estate 
created in lieu of dower or curtesy, or of other marital rights in the 
spouse's property or estate, shall not be considered to any extent a 
consideration ``in money or money's worth.'' See, however, section 2516 
and the regulations thereunder with respect to certain transfers 
incident to a divorce. See also sections 2701, 2702, 2703 and 2704 and 
the regulations at Sec. Sec.  25.2701-0 through 25.2704-3 for special 
rules for valuing transfers of business interests, transfers in trust, 
and transfers pursuant to options and purchase agreements.

[T.D. 6334, 23 FR 8904, Nov. 15, 1958; 25 FR 14021, Dec. 31, 1960; as 
amended by T.D. 8395, 57 FR 4255, Feb. 4, 1992]