A recent Tax Court case provides a road map for calculating the fractional interest discount in the absence of credible comparable sales data.
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Taxation of Estates & Trusts
IRS Delays Due Date for Choosing Basis Allocation for Decedents Dying in 2010
The IRS announced that it is delaying the due date for Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, past its original April 18 due date, but did not announce what the new due date will be.
IRS Releases 2010 Gift Tax Return
The IRS released the final 2010 version of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions.
IRS Wins Again on Annual Exclusion of Gifts of Partnership Interests
In Fisher, the IRS has again won on the issue of whether taxpayers’ transfers of partnership interests were transfers of present interests in property. The court held the transfers did not qualify for the gift tax annual exclusion.
The Gross Income Requirement for Trusts’ Charitable Deductions
The author reviews the gross income requirement for charitable deductions taken by trusts.
GRATs in 2010: Still a Viable Estate and Gift Tax Planning Option
This item describes the use of the grantor-retained annuity trust (GRAT) in estate and gift planning.
Scope of Foreign Trust Provisions in the HIRE Act
This article analyzes the foreign trust provisions of the HIRE Act and offers some practical guidance for practitioners to consider in their development of best practice procedures.
Significant Recent Developments in Estate Planning (Part II)
This discusses the estate tax, generation-skipping transfers, trusts, changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001, and the annual inflation adjustments for 2010 relevant to estate and gift tax.
Decedent Did Not Retain Possession and Enjoyment of Entire Property
The Second Circuit held that the Tax Court clearly erred in finding that the terms of an implied agreement between a decedent and her son provided that the decedent would retain enjoyment of the entirety of a 49% share in a Manhattan brownstone that she had given to the son and that the entire property should remain in the estate.
Leaving Retirement Benefits to Trusts: Pitfalls for the Unwary
There are a variety of legitimate reasons that a participant may believe it prudent to leave retirement plan benefits in trust for the benefit of the spouse. It is important that advisers are aware of the potential pitfalls associated with this option and understand the participant’s ultimate objective for the benefits.
Significant Recent Developments in Estate Planning (Part I)
This article examines developments in estate, gift, and generation-skipping tax planning and compliance between June 2009 and May 2010.
Trustee Compensation: Proceed with Caution
This item illustrates the issues that can lead to litigation on trustee compensation.
Generations of Wealth in Marcellus Shale
Many in the Marcellus shale areas are being faced with difficult financial decisions due to the newfound wealth associated with the sudden interest in the Marcellus formation.
Decedent Did Not Have an Ownership Interest in Companies
The Tax Court held that based on the facts and circumstances a decedent, who had been actively and significantly involved in managing a group of companies, did not have an ownership interest in the companies at his death for estate tax purposes.
Back to the Basics: Common Gift Tax Return Mistakes
This article addresses various issues that may arise in the preparation of federal gift tax returns, with a focus on gift tax returns that will be filed to report gifts made during 2009 or 2010.
Applying the Material Participation Standards to Nongrantor Trusts
A taxpayer may deduct losses generated from passive activities only to the extent of the income from such activities. For this purpose, any trade or business or other income-producing activity is passive with respect to a taxpayer if the taxpayer does not materially participate in the activity.
Applying the Material Participation Standards to Nongrantor Trusts
A taxpayer may deduct losses generated from passive activities only to the extent of the income from such activities. For this purpose, any trade or business or other income-producing activity is passive with respect to a taxpayer if the taxpayer does not materially participate in the activity.
Carryover Basis for Property Acquired from a Decedent Dying During 2010
For property acquired from a decedent dying during 2010, a modified carryover basis regime will apply (Sec. 1022).
A Valuation Discount Win for Estate Planners
There has been relatively little guidance on how LLCs should be treated for transfer tax purposes. However, in 2009 a case the Tax Court ruled in favor of the taxpayer that a transfer of an interest in an SMLLC should be valued as a transfer of an interest in the entity.
Estate Tax Planning for a U.S. Citizen with a Noncitizen Spouse
Under current U.S. tax law, a U.S. citizen may transfer property to his or her U.S. citizen spouse without any tax consequence or limitation. However, a U.S. citizen married to a noncitizen can make only a limited amount of bequests to his or her spouse.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
