Under current law, the unified credit against estate and gift tax sits at $10,000,000, subject to indexing for inflation (the “Exemption”).[1] As a result of the Tax Cut and Jobs Act, this number increased from $5,000,000 effective January 1, 2018 and through December 31, 2025, with the number set to drop back down to $5,000,000on…
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Is your business worth more to the IRS than it is to you? Will you owe estate tax on more value than you receive? A recent tax case illustrates how this is possible.[1] It is very common, even advisable, that closely-held business owners enter into buy-sell agreements limiting transferability of interests and setting forth procedures…
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In a recent case out of the United States District Court for the District of Connecticut, the Court denied the IRS’ motion for summary judgment and refused to aggregate the gift of partial interests in real estate together for purposes of valuing the gifts and thus determining appropriate discounts.[1] The IRS alleged that no discount…
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Many know the old adage of “it’s the thought that counts” when it comes to gifting. According to a recent Tax Court opinion, when it comes to charitable contributions, what the recipient receives is significantly more important than what is given by the donor. Charles Allen previously discussed this issue in his article on the…
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As result of the special runoff in Georgia for their two senate seats, the Democrats will now hold power in the Senate, the House, and the Presidency following President-Elect Joe Biden’s inauguration on January 20th. With the Democrats controlling the Presidency, the House, and the Senate, many have started to wonder what tax changes may…
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In a newly released Chief Counsel Advice opinion[1], the transfer of assets from a foreign entity referred to as the “Foundation” directly to a third party (the “Recipient”) at the request of the beneficiary of the Foundation (the “Beneficiary”) was deemed to be a gift from the Beneficiary to the Recipient. This is a logical…
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Introduction A couple of years ago, I wrote about the state income taxation of trusts.[1] Since that time, there have been some significant developments relating to the issues raised in that writing. Primary among those developments include the United States Supreme Court decision in the Kaestner[2] case and the United States Supreme Court’s decision to…
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Introduction Generally, a taxpayer may deduct the fair market value of appreciated property donated to a qualified charitable organization.[1] This provision expands the benefits available to taxpayers with respect to charitable deductions. The result, in effect, is that a taxpayer may gift an appreciated asset in lieu of selling the asset, paying tax, and then…
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In trust planning, it is common that a trust beneficiary is appointed as trustee. A lot of confusion surrounds the consequences of appointing a beneficiary as his or her own trustee. On one hand, I have heard people say it is not allowed to have a beneficiary serve as trustee. On the other hand, I…
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It’s common knowledge among tax practitioners that the IRS is not a fan of formula gift clauses that attempt to pin the amount of the gift to a dollar figure such that the actual gift is adjusted in the event of a successful valuation challenge by the IRS.[1] However, in a recent Tax Court case,…
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