One of the essential elements in the equation for the computation of both the federal gift and estate tax is the reduction of the tax due by the amount of the estate or gift tax on the applicable exclusion amount. Because of changes to the tax law, a surviving spouse may be able to increase his or her applicable exclusion amount by the amount of the unused exclusion amount of the deceased spouse. The term “applicable exclusion amount” has been redefined to include the sum of the basic exclusion amount and the deceased spousal unused exclusion amount.
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TOPICS
Taxation of Estates & Trusts
IRS Extends Guidance on Trustee Fees
The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under Sec. 67(a).
Discharge of Indebtedness Rules Clarified for Grantor Trusts and Disregarded Entities
The IRS issued proposed regulations that provide rules regarding who is the “taxpayer” for purposes of applying the Sec. 108 discharge of indebtedness rules to a grantor trust or disregarded entity.
Death and Taxes: Executors Beware
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act revised tax law for estates of decedents dying in 2010, 2011, or 2012. The new rules apply for 2010 unless an executor elects to use prior law.
The Estate Tax Dilemma: Protecting the Interest Expense Deduction on Estate Loans
If the requirements can be met, Graegin loans can be an indispensible option for estates seeking liquidity to pay expenses without liquidating the underlying estate assets.
Tax Court Uses Cost-to-Partition Approach to Value Fractional Interest Discount
A recent Tax Court case provides a road map for calculating the fractional interest discount in the absence of credible comparable sales data.
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.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
