The Tax Court held, in Price, T.C. Memo. 2010-2, that taxpayers were not entitled to annual gift tax exclusions under Sec. 2503(b) for the outright gifts of partnership interests.
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Taxation of Estates & Trusts
IRS Issues Guidance on GiftTax Consequences of Transfers in Trust
The IRS clarified for taxpayers that despite the provisions of Sec. 2511(c), the gift tax continues to apply to certain transfers to a wholly owned grantor trust.
Gift Tax Paid onTransfer of QTIP Remainder Included in Estate
The Tax Court held that the amounts of gift tax paid by the recipients of a QTIP remainder are includible in the transferor’s gross estate under Sec. 2035(b).
Payment of Annuity with Appreciated Property by Grantor Charitable Lead Annuity Trust
Editor: Greg A. Fairbanks, J.D., LL.M. Taxpayers often are interested in using excess assets to benefit their own philanthropic interests as well as those of their family members. Split-interest trusts, in which charitable and noncharitable beneficiaries have interests, can accomplish both purposes. Three types of split-interest trusts are sanctioned by
Inclusion of Certain Trusts in a Decedent’s Gross Estate Under Sec. 2036
Sec. 2036 requires the inclusion in a decedent’s estate of the value of property in which the decedent retained a lifetime income interest or the right to the possession or enjoyment of the property. This article examines new final and proposed regulations under Sec. 2036.
Trusts Owning Partnership Interests and the Revised UPIA
A special problem faces trustees whose principal or sole asset is a partnership that does not distribute all its taxable income. The problem arises because partnership distributions not in liquidation are “trust income” payable to the income beneficiary. Yet if the trustee pays the income beneficiary the full amount of the partnership distribution, the trust may not have sufficient cash to pay the trust’s own tax liability.
The Valuation of FLPs
Due to the popularity of family limited partnerships (FLPs) and the significant tax savings they can provide, the IRS has sought to limit the benefits of their use. As part of its attack on an FLP, the IRS frequently will challenge the value of the FLP that is claimed on an estate or gift tax return.
Charitable Deduction for Partial Disclaimer Allowed
The Eighth Circuit held that a partial disclaimer of an interest in an estate was valid and that the estate was entitled to a charitable deduction for the portion of the disclaimed amount that was given to a charitable foundation.
Gift and Estate Planning After Pierre
The Tax Court ruled that the check-the-box (CTB) regulations do not apply for purposes of valuing the transfer of property held through a single-member limited liability company (LLC) for federal gift tax purposes.
IRS Continues to Challenge Family Limited Partnerships
As the IRS continues to litigate family limited partnership (FLP) cases, it has formulated two broad-based arguments that the courts now routinely recognize to negate the estate planning benefits of FLPs.
Using GRATs in Tax Planning During Troubled Economic Times
Under the right circumstances, the potential benefit of a GRAT can be enormous, especially in those situations where the value of a business is expected to skyrocket once economic conditions improve.
Last-Minute Estate Planning for 2009: Focus on the GST
This article focuses on estate planning opportunities relating to the generation-skipping transfer tax that practitioners and taxpayers should consider for implementation in 2009.
Check-the-Box Regs. Do Not Affect the Valuation of LLC Interests
The Tax Court held that limited liability company (LLC) interests transferred by a taxpayer into trusts set up for the benefit of her children should be valued as transfers of LLC interests and not as transfers of the underlying assets owned by the LLC.
Trusts Owning Partnership Interests
When a trust instrument is silent and no discretionary power of administration exists, trustees and their advisers need to be knowledgeable of how partnership activity (including both taxable income and distributions received) is affected by the trust administration statutes of the state of situs of the trust.
Creative Ways of Achieving Grantor Trust Status
Trusts that may not appear to qualify as S corporation shareholders could actually be grantor trusts eligible to own S corporation stock.
Prop. Regs. on Graduated Retained Interests Under Sec. 2036
The IRS issued proposed regulations providing guidance on the portion of trust property includible in the grantor’s gross estate if the grantor has retained certain interests in the property
Estate Planning While We Sit, Watch, and Wait
Despite the impending confusion, there are some steps tax practitioners can take in working with clients to ensure their estates are in the best position over the next few years.
Guidance on Unbundling Trust Fees
The IRS announced that for tax years beginning before January 1, 2008, nongrantor trusts and estates would not be required to unbundle their fiduciary fees to determine what portion is subject to the Sec. 67(a) 2% threshold for itemized deductions.
Be Careful Making Disclaimers Where Trusts Are Involved
Disclaimers are very useful tools for estate planners, especially in postmortem planning. However, if an estate planner is not diligent in the planning and execution of a disclaimer, it can have adverse transfer tax consequences.
IRS Identifies Sale of Charitable Remainder Trust Interests as a Transaction of Interest
In a notice, the IRS has identified as transactions of interest certain transactions in which a sale or other disposition of all interests in a charitable remainder trust (CRT), after the contribution of appreciated assets to and their reinvestment by the trust, results in the grantor (or other noncharitable recipient) receiving the value of his or her trust interest while claiming to recognize little or no taxable gain.
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.
