Does receiving property as a result of a breach of trust constitute a gift?

One who receives property as a result of a breach of trust holds the property in constructive trust. This does make him a trustee as that term generally is used. "In the case of a constructive trust, the duty is merely to surrender the property." V SCOTT ON TRUSTS 462.1 at 3415 (3d ed.1967); see also Coco v. Coco, 107 A.D.2d 21, 24-27, 485 N.Y.S.2d 286, appeal dismissed, 65 N.Y.2d 637 (1985). In the face of this duty, the transfer of property by a trustee in violation of his fiduciary obligations cannot be said to be final or consummate. It therefore is not taxable as a gift.

Petitioners have argued for the same result by relying on Treas. Reg. 25.2511-1(g)(1), which provides in pertinent part: