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Taxation of Estates & Trusts

Ninth Circuit Affirms Transferred Residential Property Must Be Included in Gross Estate

The Ninth Circuit ruled that the full fair market value of residential property must be included in the decedent’s gross estate, finding that the decedent retained income and economic enjoyment from the property and that the inter vivos transfer of the property was not a bona fide sale for adequate and full consideration under Sec. 2036(a).

Private Annuities Can Still Save Estate Taxes

Editor: Michael D. Koppel, CPA, PFS In October 2006, the IRS issued Prop. Regs. Secs. 1.72-6(e) and 1.1001-1(j), which propose to substantially reduce the income tax benefits of private annuities (REG-141901-05). Basically, the proposed regulations require the annuitant (the person transferring the property) to recognize the entire gain or loss

Prop. Regs. Address Deductibility of Trust and Estate Costs

Editor: Kevin F. Reilly, J.D., CPA In July, the IRS issued proposed regulations (REG128224-06) providing guidance on whether costs incurred by estates or nongrantor trusts are subject to the 2% floor for miscellaneous itemized deductions. The new rules intend to clarify the deductibility of advisory fees paid by estates and

Prop. Regs. Clarify Treatment of Trust Administrative Expenses

Under Sec. 67(a), miscellaneous itemized deductions are allowed only to the extent that they exceed 2% of a taxpayer’s adjusted gross income (AGI). The AGI of an estate or trust is computed in the same manner as for an individual for these purposes, except that, under Sec. 67(e)(1), administrative costs

New Foreign Trust Tax Form Project: 1041NR

IRS representatives recently approved a joint project with the AICPA Foreign Trust Task Force. Together they will design a new Form 1041NR, U.S. Income Tax Return for Foreign Estates and Trusts, which tax return preparers and IRS personnel will find easier to understand, prepare, and process.

Change in Rules for CRTs with UBTI Contains Trap for the Unwary

Editor: Frank J. O’Connell, Jr., CPA, Esq The Tax Relief and Health Care Act of 2006 changed the provisions for charitable remainder trusts (CRTs) that have unrelated business taxable income (UBTI). Beginning January 1, 2007, an excise tax in the amount of the UBTI earned by the CRT during the

Prop. Regs. Address Application of Secs. 2036 and 2039 to Certain Annuities

Sec. 2036 provides for the inclusion in a decedent’s estate of certain transfers the decedent made during his or her lifetime in which the decedent retained certain rights in the property. Sec. 2039 provides for the inclusion in a decedent’s estate of the value of any annuity receivable by a

Courts Split over Valuation of Lottery Prize Payments

Two recent district court decisions have been handed down on the issue of whether an estate’s rights to a decedent’s remaining series of annual lottery prize payments should be valued using the Sec. 7520 annuity tables. Although both courts held that the lack of marketability of remaining lottery payments may

Seven Suggestions for IRS Estate/Gift Tax Audits

Editor: Anthony S. Bakale, CPA, M.Tax. Many practitioners do not often have to deal with estate and gift tax audits and may need information about the process: what the auditor is looking for, what documentation is needed, how best to meet the requirements, or what to do if the taxpayer

Rudkin Files Supreme Court Petition

On March 23, 2007, the Rudkin Testamentary Trust petitioned the Supreme Court to resolve the split in the circuits over whether Sec. 67(e) allows estates and trusts to fully deduct investment management fees. (The American Bankers Association will also file an amicus brief.) The Second Circuit created a three-way split

employee benefits & pensions

Abstract image of pie chart, with pieces being pulled from several directions. IMAGE BY VECTORMINE/ADOBE STOCK

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.

Tax Clinic

Proposed regulations issued on retirement catch-up contributions

IC-DISC commission payment provisions

The role of REITs for foreign investors in US real estate

Signing partnerships’ returns and other tax documents

Practical considerations for taxpayers and advisers following Loper Bright and Corner Post