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October 2009 |  BY MARK E. POWELL, ESQ. |  Article

Sooner or later, every estate planner comes face to face with the generationskipping transfer tax (GSTT). Many practitioners do not feel up to the challenge because this particular tax has a reputation for being as treacherous as the sea. But after you boil down all the complications, you’re left with a fairly direct set of circumstances to watch for.

September 2009 |  BY Steven J. Fromm |  Article

With the current economic downturn causing dislocations and struggles for businesses of all sizes, familyowned businesses may find their values diminished along with their immediate prospects. But with these challenges come opportunities for succession planning. Because closely held businesses may now be worth less than formerly, this might be a good time for tax advisers to explore with owners a chance to minimize estate and gift taxes by gifting shares to younger family members involved in the business.

July 2009 |  BY Justin P. Ransome, Vinu Satchit |  Article

One purpose of fixing a value on an interest in a closely held business is to determine gift and estate tax liability. CPAs called upon to provide such valuations know that this can be a painstaking task. It is not an exact science but an educated estimate when, as often is the case, there is no identifiable market for the interest.

July 2009 |  Article

This special report is published as a supplement to the July 2009 issue of The Tax Adviser. It looks at the status of estate, gift, and generationskipping transfer taxes over the next few years.1 Current State of the Law In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation Act (EGTRRA).2 This law was designed to result in the slow repeal of the estate and generationskipping transfer (GST) taxes.

April 2009 |  Article

The IRS issued proposed regulations Thursday 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 (REG11953208). The retained interests covered include the use of the property and the right to an annuity, unitrust, graduated retained interest or other payment from such property for life, for any period not ascertainable without reference to the grantor’s death, or for a period that does not in fact end before the grantor’s death.

March 2009 |  BY Eileen Reichenberg Sherr |  Article

In January, Rep. Earl Pomeroy, DN.D., introduced HR 436, Certain Estate Tax Relief Act of 2009, which has been referred to the House Ways and Means Committee. The bill would continue the federal estate tax exemption at $3,500,000, and set the tax rate for estates exceeding that amount at 45 (50 for estates between $10 million and $23.5 million).

November 2008 |  BY Eileen Reichenberg Sherr |  Article

The IRS has issued Revenue Ruling 200841 confirming that charitable remainder trusts (CRTs) can be divided into separate but equal trusts for each recipient without adverse tax consequences. If properly divided, the separate trusts will continue to qualify as CRTs, and no private foundation termination excise taxes will apply under IRC § 507(c).

November 2008 |  BY Alistair M. Nevius |  Article

Estate tax planners have long employed intentionally defective grantor trusts to freeze the value of an asset for estate tax purposes while transferring assets out of the estate free of gift tax. An intentionally defective grantor trust (IDGT) is a complete transfer to a trust for transfer tax purposes but an incomplete, or “defective,” transfer for income tax purposes.

October 2008 |  Article

The government asked the U.S. Supreme Court to review the Eleventh Circuit’s decision in Estate of Frazier Jelke III v. Commissioner (100 AFTR2d 20076694, “Tax Matters Dunn Does It Again,” JofA, March 08, page 70). The Eleventh Circuit previously declined to rehear en banc its decision overruling the Tax Court on a valuation discount for tax liability of an estate’s builtin capital gains.

September 2008 |  BY Bob Jennings |  Article

The Tax Court ruled, contrary to the IRS’s argument, that the step transaction doctrine did not apply where gifts of interests in a family limited partnership (FLP) were made only six days after the funding of the partnership with stock. However, the court also partially denied the taxpayers’ discounts for lack of control and marketability of those interests.