909 / When will a gift of property to a corporation qualify for the gift tax annual exclusion?

A gift of property to a corporation generally represents a gift of a future interest in the property (so that it will not qualify for the gift tax annual exclusion, see Q 906) to the individual shareholders to the extent of their proportionate interests in the corporation.¹ Also a gift for the benefit of a corporation is a gift of a future interest in the property to its shareholders and does not qualify for the annual exclusion.² In contrast, gifts made to individual partnership capital accounts have been treated as gifts of a present interest which qualify for the annual exclusion where the partners were free to make immediate withdrawals of the gifts from their capital accounts.³ However, annual exclusions were denied for gifts of limited partnership interests where (1) the general partner could retain income for any reason whatsoever, (2) limited partnership interests could not be transferred or assigned without the permission of a supermajority of other partners, and (3) limited partnership interests generally could not withdraw from the partnership or receive a return of capital contributions for many years into the future.⁴ Similarly, annual exclusions were denied for gifts of business interests where the beneficiaries were not free to withdraw from the business entity, could not sell their interests, and could not control whether any income would be distributed (and no immediate income was expected).⁵