Schmalbeck explains that there are four policy options for the combined income tax treatment of a donor-donee pair, and that the best choice among the options is not self-evident. He notes that the current income tax treatment of noncharitable gifts originated with the 1913 income tax. The historical record provides no clues as to why Congress opted for that approach in 1913. As frustrating as this may be, it is an example of an important phenomenon in the development of the income tax. A number of crucial structural decisions made in the early days of the income tax, which continue to shape the current income tax, were made without any meaningful deliberation. He also provides an illuminating account of the income tax treatment of appreciation in gratuitously transferred property.

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