This article examines developments in estate, gift, and generation-skipping tax planning and compliance between June 2009 and May 2010.
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TOPICS
Taxation of Estates & Trusts
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.
IRS Continues Focus on Disallowing Annual Exclusions for Gifts of Partnership Interests
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.
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.
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.
