Are Gift Demand Loans of Tangible Property Subject to the Gift Tax‪?‬

Suppose a parent "loans" (1) her vacation home "Dellview" in Aspen to her adult child for a non-specified period of time without rent or other charge for the use of the property. The home has a rental value of $1,000 per day. There is no formal lease agreement. Therefore, the parent, as owner, can occupy the premises or evict the child at will. The daughter in fact occupies the property for sixty-five days in the summer of 2009. Has Mother made a gift to daughter for gift tax purposes? Would any variation in this fact pattern alter the answer? If relying only on the function of the federal gift tax to hack up the estate tax and, perhaps, the income tax, the answer would be that there is no gift. On the other hand, if the gift tax is viewed as a stand-alone excise tax on gifts of all types, a technical case can be made that there are gifts totaling $65,000, but there may be good reasons for not taxing the gift. The gift tax statute does not specifically deal with what might be generically called "gift demand loans of property," and the general language of the gift tax statute arguably would not reach them on the ground that the grant of permission to use property is not itself a "property interest." (2) The 1984 case of Dickman v. Commissioner, (3) however, held that an interest-free demand loan of cash did entail a gift of a property interest. Moreover, dictum in the Dickman majority opinion suggests that the gratuitous rent-free-use of another's tangible property could be a gift. (4) Section 7872, enacted in 1984 in the wake of Dickman, applies to below-market loans of money, but not property.