When should you look a gift horse in the mouth?

Contrary to the old saying, on occasion it does pay to look a gift horse in the mouth. That is the lesson learned by the donees in United States v. MacIntyre, 109 AFTR 2d 2012-XXXX, (6/7/2012), one of a number of cases brought by the government involving a 1995 sale by J. Howard Marshall II of stock in Marshall Petroleum, Inc. back to the company shortly before his death. The issue in this case is not about who is liable for the unpaid gift tax as that issue was decided in other cases discussed below and referred to as MacIntyre I and MacIntyre II. Since this case seemed to be the third strike against the donees of this indirect gift, this case is referred to as “MacIntyre III”.