Taxation of estates and trusts

IRS issues rules on portability election

The IRS has issued temporary regulations on how to elect to use a deceased spouse’s unused exclusion from estate taxes, also known as the portability election (T.D. 9593). The rules apply to married spouses where the death of the first spouse to die occurs on or after Jan. 1, 2011,

Domicile and residency issues of non-U.S. taxpayers

If a donor or decedent is a U.S. citizen or domiciled in the United States, all gifts made and assets owned worldwide at death are subject to U.S. transfer tax in the absence of a relevant gift or estate tax treaty. In addition, even if a taxpayer has no connection

Budget proposal includes change to treatment of intentionally defective trusts

Among the various estate tax proposals in President Barack Obama’s recently released fiscal year 2013 revenue proposals is a new plan that could alter estate planning techniques and benefits with intentionally defective grantor trusts (IDGTs); the assets in these trusts would be included in the estate of the grantor at

Portability election extended for some estates

Some executors who missed a deadline to apply a decedent’s unused estate and gift tax exclusion amount to a surviving spouse received an extension Friday. The IRS announced the extension in Notice 2012-21. It applies to estates of decedents dying in the first six months after provisions for “portability” of

Grantor retained interests clarified

The IRS issued final regulations providing guidance on the portion of property (held in trust or otherwise) includible in a grantor’s gross estate if the grantor has retained the use of the property or the right to an annuity, unitrust, graduated retained interest or other payment from the property for

Estate tax protective claim procedures detailed

The IRS issued guidance on filing a protective claim for refund of estate tax and notifying the IRS that the claim is ready for consideration. The guidance, in Rev. Proc. 2011-48, provides details on who may file a protective claim, methods by which the claim must be prepared and submitted,

IRS Reissues Alternative Valuation Date Proposed Regulations

The IRS issued new proposed regulations Thursday (REG-112196-07) on electing an alternate valuation date for an estate and withdrew earlier ones released in 2008. The proposed regulations as reissued would limit the ability of estates to use the alternate valuation method if the value of the estate declines after the

Final Regulations Govern Listed Transactions for GST Tax

The IRS issued final regulations on Thursday that add transactions that reduce or eliminate the generation-skipping transfer (GST) tax as listed transactions or transactions of interest and require the disclosure of those transactions under Sec. 6011 (T.D. 9556). The final regulations adopt without change proposed regulations issued in 2009 (REG-136563-07).

Final Regs Clarify Estate Tax Treatment of Grantor Retained Interests

The IRS issued final regulations providing guidance on the portion of property (held in trust or otherwise) includible in the grantor’s gross estate if the grantor has retained the use of the property or the right to an annuity, unitrust, graduated retained interest, or other payment from the property for

Two Estate Tax Rulings Uphold IRS Regulatory Interpretations

In two recent estate tax cases, executors were denied timeliness-related claims, and although in both cases the executors said administrative failures by the IRS caused or contributed to the error, the courts said those lapses did not rise to the level of misconduct that would justify special treatment. In the

Fifth Circuit Upholds Qualified Disclaimer

In an unpublished opinion, the Fifth Circuit Court of Appeals held that a disclaimer by a legatee did not result in a lapsed bequest under Mississippi state law that would have resulted in taxable gifts of property passing to the legatee’s heirs. The circuit court thus reversed and remanded a

Estate Tax Protective Claim Procedures Detailed

The IRS issued guidance Friday on filing a protective claim for refund of estate tax and notifying the IRS that the claim is ready for consideration. The guidance, in Rev. Proc. 2011-48, provides details on who may file a protective claim, methods by which the claim must be prepared and

Estates Must File Form 706 to Make Portability Election

The IRS on Thursday issued Notice 2011-82 to alert executors of the estates of decedents dying after Dec. 31, 2010, of the need to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, within the time prescribed by law (including extensions). Form 706 must be filed to

2010 Estate Tax Payment, Carryover Basis Election Extended

Executors of estates of most decedents who died in 2010 now can get an automatic extension until March 19, 2012, to pay any estate tax due as well as to file an estate tax return, the IRS announced Tuesday. The announcement, in Notice 2011-76 and News Release IR-2011-91, also postpones

Estate Tax Form, Instructions Finalized for 2010; Due Sept. 19

The IRS on Thursday posted the instructions for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, for decedents dying in 2010. For most 2010 decedents, the due date is Sept. 19. The form itself was posted on Sept. 3, but without instructions. For decedents who died between Jan.

IRS Proposes New Rules for Deducting Fiduciary Fees

The IRS issued new proposed regulations Monday (REG-128224-06) intended to reflect the U.S. Supreme Court’s 2008 holding in Michael J. Knight v. Commissioner (552 U.S. 181) on income tax deductibility by estates and nongrantor trusts of investment advisory and other fees. The IRS simultaneously withdrew July 2007 proposed regulations with

Real Estate Transfer Taxes: Practical Considerations

Approximately two-thirds of U.S. states, as well as a number of municipalities, counties and other units of local government, impose a tax on taxpayers when they transfer real property to another party. As a practical matter, a real property transfer tax is typically triggered if a deed is recorded; however,

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Maximizing the higher education tax credits

A counterintuitive strategy can save taxes by including otherwise excludable scholarships in gross income.