Morris Jory's taxable gifts

Morris Jory, a long-time tax client of the firm you work for, has made substantial gifts during his lifetime. Mr. Jory transferred Jory Corporation stock to 14 donees in December 2005. Each donee received shares valued at $11,000. Two of the donees were Mr. Jory's adult children, Amanda and Peter. The remaining 12 donees were employees of Jory Corporation who are not related to Mr. Jory. Mr. Jory, a widower, advised the employees that within two weeks of receiving the stock certificates they must endorse such certificates over to Amanda and Peter. Six of the donees were instructed to endorse their certificates to Amanda and six to Peter. During 2005, Mr. Jory also gave $35,000 cash to his favorite grandchild, Robin. Your firm has been engaged to prepare Mr. Jory's 2005 gift tax return. In January 2006, you meet with Mr. Jory, who insists that his 2005 taxable gifts will be only $24,000 ($35,000 to Robin _ $11,000 annual exclusion). After your meeting with Mr. Jory, you are uncertain about his position regarding the amount of his 2005 gifts and have scheduled a meeting with your firm's senior tax partner, who has advised Mr. Jory for more than 20 years. In preparation for the meeting, prepare a summary of the tax and ethical considerations (with supporting authority where possible) regarding whether you should prepare a gift tax return that reports the taxable gifts in accordance with Mr. Jory's wishes.