Preface 6 results (showing 5 best matches)
- This book, now in its eighth edition, provides an introduction to the federal law of estate and gift taxation in the United States. It is thus a companion to McNulty & Lathrope, “Federal Income Taxation of Individuals in a Nutshell,” now in its eighth edition (2012). It is intended to be used by lawyers, students and scholars from other legal systems, as well as by law students in this country as a supplement to usual law school courses and materials, and perhaps as a refresher or orientation for members of the bar. It attempts to summarize the law, frequently mentioning the purposes of, and sometimes the alternatives to, existing legal rules. Only occasionally does it attempt a critical evaluation, or a history, or full justification, of the existing law. Chapters on some fundamentals of estate and gift and generation-skipping transfer tax planning, and on reform of and fundamental alternatives to the federal transfer tax system, have been included.
- The book is organized in a way that parallels many courses and teaching materials. It begins with an introduction to the gift tax, the estate tax and the generation-skipping transfer tax as separate components of the transfer tax system. After the introductory chapters, however, the book follows a “transactional” approach, taking up both the estate tax and the gift tax (and, where appropriate, the generation-skipping transfer tax) treatment of particular kinds of transfers, dispositions and situations.
- We hope this short book will prove useful as an introduction, review or overview of the subject matter of federal wealth transfer taxation in the United States. We must emphasize that it cannot substitute for, but at best can supplement, a thoroughgoing examination and analysis of the Code, regulations, rulings and cases, which are the principal sources of federal wealth transfer tax law and which must be emphasized in the study of that law by students in law school courses.
- The statutory provisions themselves form the core of the subject matter, and readers of this book should have a current copy of the Internal Revenue Code at hand. Much the same can be said for the Treasury Regulations under the transfer taxes. Frequent references to the Code (often cited as “I.R.C. §” to distinguish them from cross references to other sections of this book) and the Regulations (cited as “Reg. §”) are given throughout the text. Rulings and other administrative pronouncements are cited to the volume and page of the Cumulative Bulletin (abbreviated as “C.B.”).
- Very little attention has been given to the matter of filling out required tax returns or forms or to other questions of compliance and administration of the tax laws. These matters fall outside the scope of a short volume of this kind.
- Open Chapter
Chapter 1. Introduction 82 results (showing 5 best matches)
- These include Bittker & Lokken, Federal Taxation of Income, Estates and Gifts, Vol. 5 (2d ed. 1993); Harrington, Plaine & Zaritsky, Generation-Skipping Transfer Tax (2d ed. 2001); and Stephens, Maxfield, Lind & Calfee, Federal Estate and Gift Taxation (9th ed. 2013).
- The GST tax is aimed at removing incentives to make gifts and bequests to persons more than one generation removed from the transferor in a manner that avoids estate and gift taxation of the transferred property in the intervening generations. In some ways, the GST tax actually creates incentives for transferors to ensure that property be subject to estate or gift tax in the intervening generations.
- To avoid the federal and state taxes on transmission or receipt of property at death, some property owners made large inter vivos transfers. To counteract this technique and partly for political reasons, the federal gift tax was introduced in 1924. (It was repealed in 1926 but reinstated in 1932.) This gift tax was imposed on lifetime gifts at rates equal to three-quarters of the estate tax rates on equivalent transfers made at death. The gift tax was, and is, progressive and cumulative over a donor’s lifetime—the tax on a taxable gift of a given amount is higher if the donor has made many or large taxable gifts previously, even in prior years. Today’s federal estate and gift taxes retain many of the essential features of their 1916 and 1932 forebears. In the intervening years, however, the taxes have evolved in several significant ways.
- For many years, the separate lower rates on lifetime gifts, and the fresh start up the progressive rate ladder provided by separate taxation of the estate at death, offered substantial tax benefits for wealthy families that could afford to make large inter vivos gifts. In an effort to curtail the advantages of inter vivos giving resulting from the separate gift and estate tax structures, Congress restructured the estate and gift taxes in the Tax Reform Act of 1976, P.L. 94–455 (the “1976 Act”). Instead of two separate taxes, with two different rate schedules and a fresh start up the progressive rate ladder for the taxable estate at death, the 1976 Act adopted a unified tax structure, using only one rate schedule which applies to cumulative taxable transfers made during life and at death.
- Perspectives on the economics of transfer taxation are collected in Rethinking Estate and Gift Taxation (Gale, Hines & Slemrod eds., 2001), and in Does Atlas Shrug? The Economic Consequences of Taxing the Rich (Slemrod ed., 2000). For a provocative and insightful analysis of the political controversy surrounding the taxation of inherited wealth, see Graetz & Shapiro, Death by a Thousand Cuts (2005).
- Open Chapter
Chapter 16. Reform Proposals and Fundamental Alternatives to Present Transfer Tax Systems 65 results (showing 5 best matches)
- For a sampling of reform proposals concerning the integration of the estate and gift taxes and related matters, see Staff of Joint Committee on Taxation, Options to Improve Tax Compliance and Reform Tax Expenditures 392–424 (2005); Task Force on Federal Wealth Transfer Taxes, Report on Reform of Federal Wealth Transfer Taxes, 58 Tax Law. 93 (2004); U.S. Treasury Dept., Tax Reform for Fairness, Simplicity and Economic Growth (1984); ABA Section of Taxation, Task Force Report on Transfer Tax Restructuring, 41 Tax Law. 395 (1988); Gutman, A Comment on the ABA Tax Section Task Force Report on Transfer Tax Restructuring, 41 Tax Law. 653 (1988); and Dodge, Redoing the Estate and Gift Taxes Along Easy-to-Value Lines, 43 Tax L. Rev. 241 (1988). For earlier proposals, see U.S. Treasury Dept., Tax Reform Studies and Proposals, House Comm. on Ways and Means, Senate Comm. on Finance, 91st Cong., 1st Sess. (1969); American Law Institute, Federal Estate and Gift Taxation: Recommendations and...
- Inheritance Taxation
- Taxation of Gifts and Bequests as Income
- Estate and inheritance taxes apply on the death of each transferor. Consequently, they create differential results, and some would say inequities, depending on whether a transferor uses “generation-skipping” transfers and depending in any event on how closely the death of each transferor is followed by that of a recipient. (Notice also that many generation-skipping transfers incur no GST tax because of its several exemptions.) Even if the impact of successive taxation is ameliorated by credits of limited amount or duration, as under the present federal estate and gift taxes, estates that are taxed at several transmission points end up being diminished more by greater taxes than are estates taxed fewer times during the same period.
- Taxation as Income—Conclusion
- Open Chapter
Chapter 5. Transfers During Life—Application of the Estate and Gift Taxes 166 results (showing 5 best matches)
- The 1976 Act also added a new “gross-up” rule which now appears in § 2035(b). This provision requires that the gross estate be increased by the amount of any
- Since a transfer tax solely on property owned at death is easily avoided by making gifts shortly before dying, the federal estate tax, ever since its enactment in 1916, has contained a provision to bring some such gifts into the estate tax base. The federal gift tax, enacted in 1932, while limiting the scope of potential avoidance, did not entirely remove the need for special treatment of deathbed gifts, because of its lower rates, separate deductions and its fresh start up the rate schedule. Although the 1976 “unification” of the gift and estate taxes eliminated the most glaring disparities in the tax burden on inter vivos and testamentary gifts, still, enough differences remain (see § 79, ) to warrant inclusion of certain deathbed gifts in the gross estate.
- The gift tax will apply to an inter vivos transfer that is complete for gift tax purposes. But even though gift tax rates are nominally the same as those of the estate tax, it is necessary that the estate tax itself apply to a transfer made during life if that transfer is the functional equivalent of a testamentary transfer and would provide too easy a means of avoiding the estate tax. This potential avoidance results from the gift tax annual exclusion, from the different valuation dates under the two taxes, and from the fact that the estate tax base, but not the gift tax base, includes the assets used to pay the tax. These continuing advantages (even after the 1976 “unification” of the gift and estate taxes) of making a gift that is not included in the gross estate are discussed and criticized in § 79,
- As a practical matter, the utility of the widow’s election as an estate planning technique is severely limited by the special valuation rules of § 2702 (discussed in § 49, ). Those rules, if applicable, treat the widow as making a taxable gift of the full value of her one-half share of the community property, with no offset for her retained life estate, in computing the amount of her taxable gift for gift tax purposes. The transaction may also constitute a taxable exchange for income tax purposes. All in all, the widow’s election must be regarded as a complex and delicate estate planning instrument not to be employed without careful study of all the federal (and state) tax and non-tax issues it involves.
- As a practical matter, perhaps the most important application of § 2035(a) involves deathbed gifts of life insurance. Under § 2042(2), the proceeds of a policy on the decedent’s own life are includable in the gross estate if the decedent held any “incidents of ownership” at death. See § 41, . Since the value of a life insurance policy on a living person is often considerably less than the proceeds payable at death, the owner of a policy may seek to avoid estate taxation on the full amount of the proceeds by making a gift of the policy shortly before death. By including § 2042 in its list of enumerated sections, § 2035(a) blocks this gambit and ensures that the proceeds will be included in the gross estate if the insured person transferred any incidents of ownership within three years before death.
- Open Chapter
Chapter 13. The Marital Deduction and Split Gifts 62 results (showing 5 best matches)
- Eligible property for which an election is made will qualify in its entirety for the estate tax marital deduction, and thus will not be taxed in the decedent’s estate. Since the property not be subject to a testamentary power of appointment in be subject to such a power), special rules govern the taxation of the property in the spouse’s hands. In the absence of these special rules, the property could pass to the remainder beneficiaries without being taxed in the spouse’s estate, since the spouse owns only a life income interest which expires upon her death. Therefore, qualified terminable interest property will be subject to transfer taxation in the spouse’s hands at the earlier of (1) the date on which the spouse disposes of all or part of the qualifying income interest (by gift, sale, or otherwise), in which case the spouse will be treated for gift tax purposes as making a transfer of the underlying property (see I.R.C. § 2519), or (2) the date of the spouse’s death, when the...
- A collateral effect of a gift-splitting election under § 2513 is that split-gift treatment applies not only for purposes of the gift tax but also for purposes of the generation-skipping transfer tax, thus making two GST exemptions available for gifts to skip persons. I.R.C. § 2652(a)(2). However, the gift-splitting election has no application to the estate tax. Thus, for example, if the husband makes a gift subject to a retained life estate and the gift is treated as made one-half by husband and one-half by wife pursuant to an election under § 2513, the full value of the property may nevertheless be drawn back into the husband’s gross estate at his death. In this situation, any gift tax payable by the wife on the split gift will be attributed to the husband for estate tax purposes. I.R.C. § 2001(d); for the estate tax consequences to the wife, see I.R.C. § 2001(e).
- The availability of automatic estate splitting for married couples in community property states, and the consequent need to provide similar tax treatment for couples in separate property states, led Congress in 1948 to enact a marital deduction not only in the estate tax but also in the gift tax. The gift tax provisions set forth in I.R.C. § 2523 closely resemble the estate tax provisions of § 2056, including a terminable interest rule with enumerated exceptions to ensure that inter vivos gifts which qualify for a marital deduction in the hands of the donor spouse will eventually be subject to gift or estate tax in the hands of the donee spouse. The following discussion will deal mainly with the differences between the marital deduction provisions in the gift tax and those in the estate tax.
- The general marital deduction rule set forth in I.R.C. § 2056(a) is qualified by several limitations imposed by succeeding subsections, the most important of which is the of § 2056(b). The terminable interest rule arises from the basic premise of the marital deduction that property which qualifies for the deduction in the estate of the first spouse to die will eventually be taxed in the estate of the surviving spouse (if not disposed of before death). In the early days of the limited marital deduction, this premise followed from the attempt to correlate the treatment of property transferred tax-free under the marital deduction with treatment of property enjoyed by the surviving spouse tax-free under community property law; with the removal of the quantitative limits on the marital deduction, the same premise can be viewed as implementing the policy objective of treating the married couple as a single taxable unit. Accordingly, no marital deduction should be allowed if an interest
- Prior to the 1976 Act, § 2523 allowed a gift tax marital deduction for an amount equal to one-half the value of any qualifying interest in non-community property transferred by a donor to his or her spouse. (Thus, for gift tax purposes the marital deduction was allowed for half of the amount of the property transferred, whereas for estate tax purposes the deduction could apply to the entire value of transferred property up to the aggregate limitation of 50% of the adjusted gross estate.) In 1976 Congress relaxed the 50% limitation and allowed a 100% deduction for the first $100,000 of interspousal gifts, no deduction for the next $100,000 of such gifts, and a 50% deduction for all interspousal gifts over $200,000. The 1981 amendments introducing the unlimited marital deduction and the special treatment of qualified terminable interest property for estate tax purposes were accompanied by parallel provisions in § 2523 for gift tax purposes.
- Open Chapter
Chapter 2. The Federal Estate, Gift, and Generation-Skipping Transfer Tax Laws in Outline 111 results (showing 5 best matches)
- . A major innovation of the revised GST tax enacted in 1986 was the taxation of “direct skips.” The classic direct skip is a bequest or inter vivos gift from a transferor to a grandchild. Had the property been transferred first to the transferor’s child, there would be some additional estate or gift tax consequences when and if the property passed from the transferor’s child to the grandchild. At least, some or all of the child’s annual exclusion or unified credit might be used, and perhaps some estate or gift tax would have to be paid.
- The federal gift tax, then, has a structure that resembles that of the federal estate tax, although the statutory language tends to obscure this resemblance. The gift tax begins with the notion of a net transfer—the value of the total gift under § 2512, minus any applicable exclusions under § 2503—which is reduced to the concept of a
- One subtle but significant difference between the gift tax and the estate tax involves the measurement of the tax base. For gift tax purposes, the amount of a gift is defined as the value of the transferred property, excluding any gift tax imposed on the transfer. Accordingly, the gift tax is said to be computed on a “tax-exclusive” base; there is no “tax on the tax.” In contrast, the estate tax base includes the value of all the property owned at death (including any amount used to pay the estate tax), not just the property that actually comes into the hands of the beneficiaries. The estate tax must be paid from “after-tax” dollars, and the estate tax base is therefore said to be “tax-inclusive.” As a result of this difference in the measurement of the tax base, the rates of the gift tax are lower than those of the estate tax, even though both taxes share the same rate schedule. To illustrate, suppose that both taxes are imposed at a flat 50% rate. A donor who makes an inter vivos
- There is no longer a separate trip up the rate schedule for the taxable estate at death. This result is achieved in a manner very like the cumulative computation of the gift tax. To the taxable estate are added all
- The GST tax applies only if property is shifted from a transferor to a skip person at least two generations below the transferor, without imposition of a gift or estate tax at the intervening “skipped” generation. Thus, to determine whether a generation-skipping transfer has occurred, it is important to identify the . Under I.R.C. 2652(a), the transferor is generally defined as the decedent in the case of property subject to estate tax, or the donor in the case of property subject to gift tax. For this purpose, any property which is includable in the decedent’s gross estate or transferred by gift during life is deemed to be “subject to” estate or gift tax, without regard to exemptions, exclusions, deductions or credits. Reg. § 26.2652–1(a). As a result, whenever property becomes subject to gift or estate tax in the hands of a donor or decedent, the generation assignment of the new transferor must be examined to determine whether the transferees are skip persons.
- Open Chapter
Chapter 15. A Few Fundamentals of Estate Planning 48 results (showing 5 best matches)
- At one time, generation-skipping transfers offered an easy method of circumventing the federal transfer taxes. Now many taxpayers will seek to expose at least part of their property to estate or gift taxation as a safe harbor from an even costlier GST tax. Given the range of factors affecting the timing of transfers, the choice of assets, and applicable rates and exemptions, it will be difficult to reduce the tradeoffs between the various taxes to any convenient formula or general rule. Often the optimal estate plan will involve judicious balancing of tax burdens and benefits among the estate, gift and GST taxes.
- Prior to the 1976 Act, the advantages of making taxable lifetime gifts were plainly visible. The gift tax provided a separate graduated rate schedule which allowed a separate “ride” up the brackets for lifetime gifts. Moreover, the gift tax rates were around 25% lower than the estate tax rates, and a separate $30,000 exemption was available only for lifetime gifts. As explained in previous sections, the unification of the estate and gift taxes in the 1976 Act put an end to these advantages. However, the 1976 Act left untouched two less obvious advantages of lifetime gifts compared to transfers at death.
- The second general tax advantage of making lifetime gifts is that the “tax-exclusive” gift tax base includes only the value of the transferred property (not including any gift tax imposed on the transfer), while the “tax-inclusive” estate tax base includes the entire value of property transferred at death (including any funds used to pay the estate tax). Thus, if a donor makes a gift more than three years before death, the amount of the resulting gift tax will never be subject to transfer tax. (If the gift is made within three years of death, the amount of the gift tax will be subject to the gross-up provision of § 2035(b).) This difference may seem inconsequential in small estates, but it becomes significant in very large estates. For example, assuming a flat 40% tax rate, a person starting with $28 million can make a $20 million gift and pay the resulting gift tax of $8 million. In contrast, a transfer of $28 million at death will incur an estate tax of $11,200,000, leaving only $...
- First, the property valuation dates are different under the gift tax and the estate tax. A gift is valued at the time it is made, while property included in a decedent’s gross estate is valued at the date of death (or the alternate valuation date, if applicable). If a donor makes a completed gift of property and retains no powers or interests that will cause the transferred property to be drawn back into the gross estate at death, any future appreciation in the transferred property will escape inclusion in the donor’s transfer tax base. Moreover, separate gifts of property made to several donees (or to a single donee at different times) may be eligible for valuation discounts that would not be available for an aggregate bequest of the same property at death. This creates an opportunity for what is called “estate freezing,” a technique whereby a donor makes lifetime gifts of property interests which are expected to appreciate rapidly in value, while retaining property interests with...a
- Estate planning is a specialty involving complicated techniques and sound legal judgment; it cannot be mastered merely by applying mechanical rules. Nevertheless, some general introduction to a few guiding principles of estate planning can serve to review the basic structure of the federal estate and gift and generation-skipping transfer taxes and also convey something about the nature of estate planning possibilities given the impact of these transfer taxes. (Income tax factors also form an important component of estate planning, but they will be considered only briefly here.)
- Open Chapter
Chapter 4. Donative Intent and Consideration 57 results (showing 5 best matches)
- Underlying the definition of a gift for gift tax purposes are considerations related to the role of the gift tax as a backstop for the estate tax. Thus, a transfer which depletes the estate of the transferor is likely to be regarded as a taxable gift. However, that notion cannot safely be translated into a rule, for many consumption expenditures and other disbursements that do in fact deplete the wealth and hence the gross estate of a person are not transfers subject to gift tax. Support given to one whom the taxpayer is obligated to support, such as a minor child or spouse, is not a taxable gift. A transfer by an elderly parent to a child will be scrutinized very carefully, even if it is cast in the form of a purchase or other business transaction, to determine whether it is a gift in disguise. While not every estate-depleting expenditure will be taxed as a gift, a transfer of property that confers a net benefit upon the recipient and is not offset by a benefit flowing to the...
- To regard the release of support rights as consideration and hence to refrain from applying the gift tax to a transfer made for equivalent value in the form of a release of support rights makes perfectly good sense. The transfer of property in exchange for the release of support rights can be viewed as an anticipatory lump-sum substitute for the provision of support during the joint lifetime of the two spouses. For example, expenditures actually made by one spouse to provide support for the other spouse during marriage would not be taxable as gifts, even in the absence of a marital deduction. Such outlays are not taxed as gifts because they are made in discharge of a legal obligation. Although expenditures for support do reduce the gross estate and hence the taxable estate of the person who makes them, they are not the kind of gratuitous transfers at which the federal transfer taxes are aimed. Similarly, if one spouse dies without having fulfilled his or her support obligations...
- Under the broad rule of § 1041, the transferor is deemed to be making a gift even if he actually sells the property to his (or her) spouse for cash, and the transferee takes the transferor’s basis even though she (or he) paid the purchase price in cash (or other property). These income tax non-recognition and basis rules flow from the § 1041(b) characterization of the transfer as a gift. But that characterization certainly does not make the transferor taxable under the gift tax, at least if he (or she) receives fair and adequate consideration in return. The transferor then is not making a gift, for gift tax purposes, in the sense of a gratuitous transfer. For gift tax purposes, § 2516 deems qualified transfers pursuant to marital property settlement agreements to be made for a full and adequate consideration in money or money’s worth. For similar rules in the estate tax, see I.R.C. §§ 2053 and 2043, discussed in § 26, ...(b)(2) incorporates the § 2516 exemption into the estate tax....
- In other words, this entire area of the law reflects a general policy of protecting the estate and gift tax base from being eroded by marital property settlements that result in artificial estate depletion. Against this policy lies a determination to allow expenditures or transfers that do not result in wrongful estate depletion to be made tax-free. Thus a concept of “artificial” or “wrongful” estate depletion may help to explain the gift and estate tax rules. Another way of viewing the matter is to ask whether the promisee or recipient of an inter vivos transfer either gave something in return that augmented the transferor’s wealth (and presumably will augment his or her gross estate at death) or relinquished some right or claim that the transferor otherwise could have been compelled to pay without incurring gift or estate tax. This understanding of the underlying policy, however, is not a legal standard or a way in which the Service or the courts generally frame the matter. At...
- The “external test” has also led some courts to honor installment sales between relatives, with the subsequent forgiveness of the debt at the rate of $10,000 per year qualifying for the annual gift tax exclusion. The original transaction is treated as a bona fide sale, despite the avowed intent of the “seller” to forgive each installment as it comes due, and thus, in the course of time, to forgive the entire debt. For example, suppose a parent sells property worth $100,000 to her child in exchange for $10,000 cash down and a $90,000 mortgage note payable in $10,000 annual installments over the next nine years. Under Haygood v. Commissioner, 42 T.C. 936 (1964), and Estate of Kelley v. Commissioner, 63 T.C. 321 (1974), the sale is deemed to be for adequate consideration, i.e., the down payment plus the note. The parent’s forgiveness of each annual installment as it comes due constitutes a gift of $10,000 to the child, but the gifts are excludable under § 2503, with the result that the...
- Open Chapter
Chapter 14. Credits Against the Estate and Gift Taxes: Liability and Payment of the Taxes 39 results (showing 5 best matches)
- . In order to remedy these inequities, the 1976 Act abolished the separate estate and gift tax rate schedules and replaced them with a which is set forth in I.R.C. § 2001(c) for estate tax purposes and is adopted by reference in I.R.C. § 2502(a) for gift tax purposes. The 1976 Act also abolished the separate estate and gift tax exemptions and replaced them with a which is found in I.R.C. §§ 2010 and 2505. As its name implies, the unified credit functions as a single, cumulative allowance against both the estate and gift taxes, even though the estate and gift tax components are set forth in separate statutory provisions.
- I.R.C. § 2012 allows a credit against the estate tax for
- Note the effect on the estate tax computation under § 2001(b) of any changes in the unified rate schedule occurring between the time of a post-1976 taxable gift and the date of death. In determining the amount of the offset against the tentative estate tax under § 2001(b)(2), the gift tax “payable” with respect to a post-1976 gift is computed as if the rate schedule in effect at the date of death had been applicable at the time of the gift. This method of computation allows a consistent application of the estate tax rate schedule to a cumulative base including post-1976 taxable gifts, and avoids giving retroactive effect to interim rate changes.
- The separate gift and estate tax exemptions under prior law were worth more to high-bracket taxpayers than to those in lower brackets. For example, under the old estate tax rate schedule, the $60,000 estate tax exemption resulted in a tax saving of $9,500 for a $60,000 estate at the bottom of the rate schedule, compared to a $46,200 tax saving for an estate in the top rate bracket. In other words, the exemptions, acting as deductions, came “off the top,” and thus eliminated tax on $30,000 (gift tax) and $60,000 (estate tax) of taxable transfers at the taxpayer’s
- The mechanics of the unified credit in the estate tax context are somewhat complicated, due to the cumulation of lifetime gifts into the estate tax base. Section 2010 allows the unified credit (reduced only by 20% of any exemption allowed under prior law for post-September 8, 1976 gifts) to be applied against the estate tax liability, seemingly regardless of whether any or all of the available credit has already been taken against the gift tax during life. In spite of appearances, however, this does not amount to a double allowance of the credit, since the estate tax is computed under § 2001(b) as the excess of (1) a tentative tax on the sum of the taxable estate taxable gifts made after 1976 (other than those already includable in the gross estate), over (2) the gift tax “payable” with respect to gifts made after 1976. The unified credit is then applied against this amount. To the extent that the unified credit was used during life, the gift tax “payable” will have been reduced,...
- Open Chapter
Chapter 3. The Estate and Gift Taxes Applied to Transfers at Death and During Life 73 results (showing 5 best matches)
- It is unlikely that the Supreme Court will be called upon to decide additional questions of Congressional intent in this area. Congress reacted to by stating that no “law exempting any property (or interest therein) from taxation shall exempt the transfer of such property (or interest therein) from Federal estate, gift, and generation-skipping transfer taxes” unless Congress does so by specific reference to an appropriate provision of the Internal Revenue Code. See Deficit Reduction Act of 1984, P.L. 98–369, § 641.
- If the donor does retain some interest in the property given away, that interest must be susceptible of valuation or else the value of the gift will be determined without any allowance for the retained interest. If a gift is regarded as incomplete because the donor has retained dominion and control, a completed gift for gift tax purposes will occur upon relinquishment or termination of the donor’s dominion and control during his or her lifetime. In general, the degree of control that the donor must retain in order to render a gift incomplete for gift tax purposes is somewhat greater than what must be retained to render a transfer incomplete until death for estate tax purposes.
- In general, the rules about when a transfer is complete for gift tax purposes do not coincide exactly with the rules about when a transfer is complete for estate tax purposes. Therefore, a transfer that is complete and thus incurs a gift tax may nevertheless be regarded as incomplete for estate tax purposes, with the result that estate tax is payable on the same property or interest at the time of the donor’s death (with a credit for the gift
- These deceptively simple statutory rules give rise to difficult questions about what is a “gift” for federal gift tax purposes. In the absence of more detailed statutory assistance, regulations, rulings and cases are important aids in construing the statutory rules. The regulations under § 2511 prove especially helpful in explaining the appropriate treatment of several commonly encountered gift situations. See Reg. §§ 25.2511–1 and 25.2511–2. One of the first questions encountered in applying the basic statutory rules is what will be regarded as “property” for purposes of the gift tax. (A “gift” of services is not taxed as a gift by the federal gift tax—which raises serious questions of equity, efficiency and transfer tax (and income tax) policy.)
- . A disclaimer or renunciation of an interest in property may constitute an indirect transfer, as when a beneficiary refuses to accept his or her share in an estate or a trust and thereby enlarges the share of the other beneficiaries. Nevertheless, if the requisite formalities are observed, a disclaimer may escape being treated as a transfer for purposes of state property law: The disclaimed interest will be deemed to pass directly from the original owner to the ultimate recipient, without ever passing through the hands of the disclaimant. In some early cases, the courts looked solely to state law in deciding whether to afford similar treatment to disclaimers for federal gift tax purposes. If the disclaimer prevented any interest from vesting in the disclaimant under state law, there was no taxable gift; but if the interest was deemed to reach the ultimate recipient as the result of a transfer by the disclaimant, the gift tax was applicable. See Brown v. Routzahn, 63 F.2d 914 (6th...
- Open Chapter
Chapter 12. Deductions—Estate and Gift Tax 43 results (showing 5 best matches)
- I.R.C. § 2522 allows a gift tax deduction for transfers to charities parallel to the deduction in the estate tax. As a result, contributions to charities are not treated as taxable gifts, largely in order to encourage (or to avoid discouraging) such donations. See generally Reg. §§ 25.2522(a)–1 through 25.2522(d)–1. This deduction, like the charitable deduction in the estate tax, has a “wealth-variant” or “gift-variant” quality. That is to say, a taxpayer who has considerable wealth and who has made substantial gifts in the past will save more in gift taxes by making a deductible gift to a charity in lieu of a taxable gift to some other recipient than will a poorer taxpayer. The basis for this effect is revealed by a glance at the graduated transfer tax rates set forth in § 2001(c) and incorporated by reference in § 2502. A “limiting case” of the wealth-variant effect of the charitable gift deduction is that of the taxpayer who has not sufficiently used up his or her annual...
- I.R.C. § 2055 allows a deduction, in determining the taxable estate, for the amount of all bequests, legacies, devises, or transfers to a governmental entity for exclusively public purposes, or to a corporation, trust or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, or to a veterans’ organization, as described in the statute. Like its counterparts in the income and gift taxes, the estate tax charitable deduction serves to encourage charitable contributions and to provide an incentive for such socially desirable activity. To the extent the activity supported by deduction-induced contributions provides benefits and services that otherwise would have to be financed by government, the charitable deduction serves to reduce the cost of government at the same time that government foregoes some tax revenue. The estate and gift tax charitable deductions are unlimited in amount; they include no percentage limitations comparable...
- In a system with graduated tax rates, a deduction (or an exemption or an exclusion, but not a credit) serves to reduce the rate of tax and thus it has a “wealth-variant” quality. For example, a funeral expense deduction of $1,000 will have a different tax effect in the case of a decedent with a large gross estate than it will in the case of a decedent with a small gross estate. The $1,000 deduction will reduce the tax liability of the estate by an amount equal to $1,000 times the marginal rate of tax payable “at the top” by the estate. Thus, a $1,000 deduction for an estate in the 40% bracket would save $400 in tax, but a deduction of the same amount for a smaller estate in the 20% bracket (i.e., a taxable estate over $10,000 but not over $20,000) would save only $200 in tax. This “wealth-variant” (or more properly, “estate-size-variant”) effect of the deduction is perfectly proper in a tax system with a graduated rate schedule. A larger net estate pays tax at a higher rate and...
- As government faces ever-increasing budgetary constraints, the efficiency of the charitable contribution deduction as a way of providing support to charitable organizations or relieving government of some burdens of providing social benefits deserves closer scrutiny. In particular, the “wealth-variant” effect of the charitable deduction raises difficult questions of policy. A deduction for a contribution of, say, $1,000 to charity will have a very different impact in a very large estate than in a small estate. The after-tax cost for a very wealthy decedent to make a gift of $1,000 to his favorite charity can be as little as $600 ($1,000 contribution minus $400 saved in taxes by the deduction for an estate in the 40% bracket yields a net cost of $600 to the taxpayer). For a taxpayer who, as a result of other deductions, credits or exemptions, would have no taxable estate, the charitable contribution deduction afforded by § 2055 provides no benefit at all. The after-tax cost of his
- It would be possible to construct an allowance for charitable contributions that would not be “wealth-variant.” For example, each taxpayer might be given a against his tax of some percentage of the amount he contributed to charity. Then, the dollar-for-dollar benefit of a charitable contribution would be the same for very wealthy decedents and for not-so-wealthy decedents. (Such a credit could even be made to be refundable to the extent it exceeded the tax payable.) Or, the deduction might be geared to a percentage formula so as to provide a tax benefit that did not vary with the size of the estate. More radically, the tax benefit could be made to vary or to phase-out with the size of the estate, so that a greater tax saving per dollar of contribution would be afforded to poorer taxpayers than to richer ones. All in all, whether the deduction should remain in the Code or should be repealed or should be converted to some other form of tax allowance is a question that merits further...
- Open Chapter
Chapter 10. Inclusion and Valuation 62 results (showing 5 best matches)
- Preceding chapters of this book have dealt with the extent of inclusion or with the determination of which interest is to be included under the various rules of the estate tax. Similarly in the gift tax area, the question has been what property or interest is the subject matter of the gift and thus includable in the base for the gift tax. This chapter turns first to the question of how property or an interest in property that is admittedly includable in the gross estate shall be valued for
- One important distinction to keep in mind is that each gift of property made during life is ordinarily valued separately from other gifts of similar property, even if all the gifts occur at the same time. For example, if a parent who owns all of the outstanding stock of a family corporation makes simultaneous gifts of 20% of the shares to each of her five children, each gift will be valued as a separate minority interest. Rev.Rul. 93–12, 1993–1 C.B. 202. In contrast, if the parent held the stock until death and left it by will to her children in equal shares, the stock included in the gross estate would be valued as a single controlling interest for estate tax purposes. By the same token, a single testamentary gift of a large block of stock may qualify for a blockage discount that would not be allowed in the case of separate, smaller gifts made during life. See Reg. § 25.2512–2(e).
- The situation was considerably more complicated under the broader version of the three-year rule as it existed prior to the 1981 amendments, when § 2035(a) required that any gratuitous transfer made by the decedent within three years of death be drawn back into the gross estate. Although the regulations promulgated under prior law have been withdrawn and much of the case law interpreting those regulations is no longer directly applicable, the principles developed under prior law remain relevant by analogy in other areas of the estate tax (e.g., in tracing contributions to joint tenancy property under § 2040) and therefore deserve brief mention here. If an outright, “no-strings” lifetime gift was drawn back into the decedent’s gross estate, the regulations indicated that the amount to be included was the value of the gift property itself. In the case of a cash gift, it was held that the includable amount was equal to the amount of the cash gift, even if the donee had spent the cash...
- Valuation for purposes of the gift tax is governed by principles largely resembling the general principles applicable in the estate tax area. Under I.R.C. § 2512(a), a gift made in property is to be valued at the date of the gift. If property is transferred for less than an adequate and full consideration in money or money’s worth, then the amount by which the value of the property exceeded the value of the consideration is deemed a gift. I.R.C. § 2512(b). The value of the consideration offset evidently is to be established as of the date of the gift. The regulations under § 2512 provide detailed guidance to valuation problems under the gift tax (mirroring, in substantial measure, the principles enunciated in the parallel regulations under § 2031). Fair market value is to be determined as of the date of the completed gift, and is defined as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or
- During the 1970s and 1980s, planners developed and refined various “estate freezing” techniques which often allowed taxpayers to pass property to younger generations at artificially low values for estate and gift tax purposes. Congress initially responded in 1987 with former I.R.C. § 2036(c), which addressed a broad range of transactions by requiring that interests transferred during life be drawn back into the transferor’s gross estate at death. This provision, as amended in 1988, was widely perceived as unduly complex, vague, and intrusive. See § 31,
- Open Chapter
Chapter 7. Life Insurance—Estate Tax and Gift Tax 44 results (showing 5 best matches)
- The price of making an inter vivos gift of life insurance, to minimize estate taxes or for any other purpose, is exposure to gift taxation. Just like any other item of property, a life insurance policy can be the subject of a transfer by gift, potentially taxable as such under the gift tax, whether the policy given away is one on the life of the donor or on the life of some other person. Also, a gift may take place if one person (the donor) pays premiums on a life insurance policy owned by another person (the donee), whether or not the policy itself was ever the subject of a transfer. The payment of premiums itself amounts to a gift when the policy is owned by someone other than the person paying the premiums.
- As the regulations elaborately state, if the insured purchases a life insurance policy or pays a premium on a previously issued policy, the proceeds of which are payable to a beneficiary or beneficiaries other than his estate, and with respect to which the insured retains no reversionary interest in himself or his estate and no power to revest the economic benefits in himself or his estate or to change the beneficiaries or their proportionate benefits (or if the insured relinquishes by assignment, by designation of a new beneficiary or otherwise, every such power that was retained in a previously issued policy), the insured has made a gift of the value of the policy, or to the extent of the premium paid, even though the right of the assignee or beneficiary to receive the benefits is conditioned upon surviving the insured. Reg. § 25.2511–1(h)(8). Although this portion of the regulations refers to a gift by the insured person under the policy in question, it is equally clear that a...
- As indicated by the regulations, the time when a transfer of a life insurance policy is complete for gift tax purposes is when the donor has divested himself or herself of all dominion and control (i.e., all incidents of ownership) over the policy. Reg. §§ 25.2511–2 and 25.2511–1(h)(8). If the donor retains the power to name the beneficiary of the proceeds at the death of the insured person, no gift tax will be imposed at the time of transfer. If the donee surrenders the policy for its cash value, however, a completed gift will be deemed to take place at that time. (If the donee does not surrender the policy and the donor-insured retains the power to designate a beneficiary until his death, the proceeds will be included in the donor’s gross estate at that time under § 2042. In this way, the regulations seek to coordinate the gift and estate tax treatment of transfers of life insurance policies.)
- Proceeds of life insurance that are not includable in the decedent’s gross estate under § 2042 may turn out to be includable under some other estate tax provision. In this regard, special attention should be paid to the three-year rule of § 2035(a). If the decedent takes out an insurance policy on his own life, then makes a gift of the policy to another person and dies within three years after the gift, the proceeds will be includable in his gross estate under § 2035, even though he held none of the incidents of ownership at death and none of the proceeds were payable to his estate. In other words, the proceeds will be includable if the decedent held any of the incidents of ownership at any time within three years of death, due to the interaction of §§ 2035 and 2042, unless they were all disposed of before death for an adequate and full consideration. (Nevertheless, in determining the amount includable under § 2035, a pro-rata exclusion may be allowed for any premiums paid by the...
- Insurance in Community Property Situations
- Open Chapter
Chapter 11. Exemptions and Exclusions—Gift Tax (Gifts of Future Interests and Gifts to Minors) 39 results (showing 5 best matches)
- As the regulations put it, no part of the value of the gift of a future interest may be excluded in determining the total amount of gifts made during the taxable year. The regulations go on to say that “future interests” is a term that includes reversions, remainders, and other interests or estates, whether vested or contingent, and whether or not supported by a particular interest or estate, which are limited to commence in use, possession, or enjoyment at some future date or time. Reg. § 25.2503–3(a). Thus the prohibition against an annual exclusion for a gift of a future interest will apply even in the case of an indefeasibly vested remainder where it is possible at the time of the gift to identify the individual who (either personally or through his estate) will eventually receive full beneficial ownership of the property and where there is no possibility of the interest shifting by some contingency or condition to another taker. Furthermore, not even a single exclusion will be...
- Section 2503(a) defines “taxable gifts” as the total amount of gifts made during the calendar year, less the deductions provided in §§ 2522 and 2523. In computing taxable gifts, every donor is entitled to an annual, per-donee of $10,000 (indexed for inflation, $14,000 in 2015). The annual per-donee exclusion is authorized in I.R.C. § 2503(b), which states that in computing taxable gifts for the calendar year, in the case of all gifts (other than gifts of future interests in property) made to any person by the donor, the first $10,000 of such gifts to such person shall not be included in the total amount of gifts made during that year. Since a gift of a future interest does not qualify for the annual exclusion, the entire value of a future interest in property must be included in the total amount of gifts for the calendar year in which the gift is made. In other words, the first $10,000 of present-interest gifts made by a donor to a particular donee during a calendar year are...
- Section 2503(c) provides that, for purposes of the future interest rule of § 2503(b), no part of a gift to an individual who has not reached the age of 21 years on the date of the transfer shall be considered to be a gift of a future interest in property if the property and the income therefrom may be expended by or for the benefit of the donee before he reaches the age of 21 years and, to the extent not so expended, will pass to the donee when he reaches age 21 or, if he dies before that age, will be payable to the donee’s estate or as he may appoint under a general power of appointment. Thus, for example, a gift in trust for a minor child will be eligible for the annual exclusion, even though the child is not immediately entitled to any distributions of income or corpus, if the trustee has unlimited discretion to expend income and corpus for the benefit of the child and all unexpended income and corpus is required to be paid to the child at age 21 (or to the child’s estate if the...
- The size of the annual exclusion has been changed from time to time. These changes remain relevant in later years by reason of the way the gift tax is calculated. Although the gift tax is payable on an annual basis, each year’s gift tax computation builds on the donor’s cumulative taxable gifts made in prior years. To determine the tax payable for a given year, the total taxable gifts made since enactment of the gift tax on June 6, 1932 to the end of the current year must be aggregated and a tentative tax on such gifts must be computed at present rates. From that amount must then be deducted a tentative tax, again determined at present rates, on the total taxable gifts made in prior years. The amount so calculated is the gift tax for the current year. I.R.C. §§ 2501 and 2502. Against the gift tax so computed may be offset any unused portion of the unified credit. I.R.C. § 2505. For purposes of determining the aggregate amount of taxable gifts in past years, exclusions, deductions
- Often, however, a donor may find it convenient or prudent to make a gift to or for the benefit of a minor in the form of a custodianship or trust arrangement, rather than as a direct gift. Before the enactment of I.R.C. § 2503(c) (discussed below), and even thereafter in cases not covered by that provision, there was some uncertainty about whether a gift of property to a trustee for a minor could be regarded as a gift of a present interest. Some courts held that the gift was a transfer of a present interest if the trustee did not have any discretion to withhold payment or if a guardian could demand payment of the income or property on behalf of the minor. See Crummey v. Commissioner, 397 F.2d 82 (9th Cir.1968); Kieckhefer v. Commissioner, 189 F.2d 118 (7th Cir.1951). Other courts, however, refused to find a gift of a present interest if no guardian was actually appointed and authorized to act for the minor at the time of the gift. Stifel v. Commissioner, 197 F.2d 107 (2d Cir.1952).
- Open Chapter
Chapter 9. Powers of Appointment—Estate and Gift Tax Consequences 33 results (showing 5 best matches)
- The regulations under § 2514 provide substantial explanatory material. See Reg. §§ 25.2514–1 through 25.2514–3. Many of the definitions and other rules in the gift tax provisions coincide with or parallel the estate tax regulations on the same points. For example, the gift tax regulations, echoing the estate tax regulations, state that the term “power of appointment” does not include powers reserved by a donor to himself. Reg. § 25.2514–1(b)(2). Nor is any provision of § 2514 or of the regulations thereunder to be construed to limit the application of any other section of the Code or the regulations. Specifically, the power of the owner of property to dispose of his own beneficial interest is not a power of appointment, and the interest is includable in the amount of his gifts to the extent that it would be includable under § 2511, without regard to § 2514. So, if Tom (after October 21, 1942) creates a trust to pay income to his wife Alice for life, with power in Alice to appoint...
- In many respects, the rules of the gift tax with respect to powers of appointment complement the rules of the estate tax. The general rule of the gift tax, embodied in § 2514(b), is that the of a post-1942 general power of appointment shall be deemed a transfer of property by the individual possessing the power. A of the power is treated as a release of the power by § 2514(e), but only to the extent that the property subject to the lapsed power at the time of the lapse exceeds the greater of $5,000 or 5% of the value of the property from which an exercise of the lapsed power could have been satisfied. A of such a power shall not be deemed a transfer by the holder for gift tax purposes, if the disclaimer meets the requirements of § 2518 (discussed in § 20, ). A statutory definition of what is a “general power of appointment” for gift tax purposes can be found in § 2514(c); it is almost identical to the estate tax definition in § 2041(b). See Reg. § 25.2514–1.
- Since the mere possession of a post-1942 general power of appointment causes estate tax consequences, some incentive is created to exercise or release such a power during life. By treating a lifetime exercise or release as a taxable event, the gift tax rule of § 2514 backstops the estate tax and prevents easy, tax-free avoidance of § 2041.
- Slightly different rules are applicable with respect to pre-1942 powers. Under § 2514(a), the exercise of a pre-1942 general power is taxable as a transfer of property by the person possessing the power. However, failure to exercise a pre-1942 general power or the complete release of such a power is not deemed to be an exercise of the power and hence is not a taxable transfer. Furthermore, a pre-1951 partial release of a pre-1942 general power, the effect of which is to cut down the general power to a special power, is not treated as a taxable gift at the time of the release and the exercise of the reduced power at a later time will not give rise to gift or estate tax. I.R.C. § 2514(a). In other instances, a partial release and subsequent exercise or release will be telescoped and treated as an exercise or release of a general power.
- From the nature of a power of appointment, one can easily infer that estate tax consequences may and should be involved. For example, if the decedent held a power of appointment which could have been exercised to make him the owner of property held in trust, and the decedent exercised the power by will in favor of another person, the exercise of the power is functionally equivalent to a testamentary gift of property and will be taxed accordingly. Indeed, the mere possession of such a power, even if it is not actually exercised, may be viewed as approaching beneficial ownership of the property subject to the power.
- Open Chapter
Outline 82 results (showing 5 best matches)
- Chapter 2. The Federal Estate, Gift, and Generation-Skipping Transfer Tax Laws in Outline
- § 2. History and Evolution of the Federal Estate, Gift, and Generation-Skipping Transfer Taxes
- § 1. Nature of the Federal Estate, Gift and Generation-Skipping Transfer Taxes
- Chapter 3. The Estate and Gift Taxes Applied to Transfers at Death and During Life
- § 24. Marital Property and Support Rights as Consideration—Estate Tax and Gift Tax
- Open Chapter
Chapter 6. Jointly Owned Property and Community Property 27 results (showing 5 best matches)
- The treatment of income from gift property, e.g., rent, dividends and interest, must be distinguished from the treatment accorded appreciation in tracing the source of consideration under § 2040(a). If A gives Blackacre, worth $10,000, to B and B sells it for $15,000 and then uses the proceeds to purchase joint tenancy property with A, what result? There would seem to be little basis for reaching a different result than if income from Blackacre were used, and the cases agree that B should be treated as having contributed the $5,000 attributable to the appreciation in Blackacre. See Harvey v. United States, 185 F.2d 463 (7th Cir.1950); Estate of Goldsborough v. Commissioner, 70 T.C. 1077 (1978), aff’d, 673 F.2d 1310 (4th Cir.1982). This, however, is where the similarity of treatment ends. If instead of selling Blackacre, B contributed the appreciated property directly as his share of a joint tenancy with A, the regulations treat A as having contributed the entire consideration for...and
- In general, § 2040(a) provides that a decedent’s gross estate shall include the value of property held jointly by him and another person or persons with right of survivorship. One exception: if the property was acquired by the decedent and the other joint owner by gift, devise, bequest or inheritance, only the decedent’s fractional share of the property must be included in his gross estate. In all other events, the entire value of the jointly owned property is included in the estate of the first joint owner to die, such part of the entire value as the taxpayer can show was attributable to consideration in money or money’s worth furnished by the other joint owner (or owners).
- In determining what consideration was furnished by the other joint owners, there is taken into account only that portion of such consideration which is shown not to have been acquired from the decedent for less than an adequate and full consideration in money or money’s worth. Under this general rule, it is obvious that if A gives $10,000 to B, which B turns around and invests in joint tenancy property with A, and A then dies survived by B, the entire value of the property at A’s death will be includable in his gross estate. Although B nominally furnished the consideration for the joint tenancy property, the funds used to acquire the property were acquired as a gift from A and will therefore be attributed to A under the tracing rules of § 2040(a). Reg. § 20.2040–1(c)(4). An important exception, however, involves income from property given by the decedent to the other joint owner. The income generated by such gift property in the hands of the other joint owner will not be traced back...
- Gift Tax
- By its nature, joint ownership with right of survivorship presents special gift and estate tax problems. When one of the co-owners of a joint tenancy or tenancy by the entirety dies, the surviving tenant becomes the outright owner of the entire property by virtue of the form of ownership in which the property was held. The right of survivorship takes effect automatically, by operation of law; the decedent’s interest does not pass by will or intestacy and is not subject to probate administration as an asset of the probate estate. In other words, the decedent’s interest in the property terminates at death. A joint tenancy also can be terminated before death, either by mutual agreement of the parties or by either of them acting alone (e.g., by partition or conveyance). If one joint tenant transfers his interest to a third person, the right of survivorship is destroyed and the result is a tenancy in common between the third person and the other original tenant. A tenancy by the entirety...
- Open Chapter
Chapter 8. Annuities and Employee Death Benefits—Estate Tax and Gift Tax 27 results (showing 5 best matches)
- Before the enactment of § 2039 in 1954, annuities were subject to estate taxation, if at all, under other provisions such as §§ 2033, 2036, or 2038. The enactment of § 2039 provided a single, targeted rule for annuities which removed some uncertainties and also dealt specifically, in § 2039(b), with the problem of annuities purchased in part by contributions of the decedent and in part by contributions of others.
- I.R.C. § 2039 sets forth the basic estate tax rules for the taxation of annuities. Section 2039 is not exclusive, however, and the possibility remains that some other estate tax section will apply. (That possibility will be discussed briefly after an examination of § 2039.)
- In the absence of a specific statutory provision, the application of the gift tax to inter vivos transfers of annuities is governed by general gift tax principles. For example, a taxable gift may occur if one person purchases an annuity solely for the benefit of another. (Of course, it is possible that such a transaction involves compensation for services or the purchase of property, with potential income tax, but not gift tax, consequences to follow.) Also, if one person purchases an annuity that will benefit both himself and someone else, at once or later, a gift may be involved, since the purchaser is making a transfer in part to or for the benefit of the other person. Further information must be obtained to ascertain when the transfer is complete, what offsetting consideration, if any, has been received, whether the transfer is at arm’s length and in the ordinary course of business and, altogether, what amount must be included in the gift tax base. Also, a problem may arise with...
- In order to understand § 2039 and the problem to which it is addressed, one must understand something about the nature of an annuity and how it can present matters of interest to an estate tax system. An annuity is defined as one or more payments or the right to receive such payments, for a period of time, such as for life or for a term of years or for some other period. Sometimes an annuity is purchased by the person entitled to receive payments under it, sometimes the annuity is received as a gift, and sometimes it is provided by an employer to an employee as a form of compensation. For estate tax purposes, the purchased annuity provides the best illustration. Thus, if a taxpayer transfers property to an annuity company (or any other person) in return for a promise by the transferee (called the issuer) to pay $8,000 a year to the taxpayer (called the annuitant), the taxpayer has purchased an annuity and each annual payment is a payment of the annuity. If the stream of $8,000...
- Similarly, if during her life Mary had purchased an annuity contract that was to go into effect only upon Mary’s death and at that time to start paying annual amounts to her surviving spouse or child, there would be no inclusion in her gross estate under § 2039 since Mary had no right to receive any payments during her life. See Kramer v. United States, 406 F.2d 1363 (Ct.Cl.1969). (The gift tax would apply, however, at the time of purchase.)
- Open Chapter
Copyright Page 5 results
- Nutshell Series, In a Nutshell
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- West, West Academic Publishing, and West Academic are trademarks of West Publishing Corporation, used under license.
- Printed in the United States of America
- © 2016 LEG, Inc. d/b/a West Academic
- Open Chapter
Index 145 results (showing 5 best matches)
Table of Cases 51 results (showing 5 best matches)
- Hill’s Estate, In re ............................................................. 88
- Anderson, Estate of v. Commissioner ............................ 112
- Bahen, Estate of v. United States .................................. 278
- Barr, Estate of v. Commissioner .............................. 82, 276
- Barrett, Estate of v. Commissioner ................................ 138
- Open Chapter
Table of Internal Revenue Code Sections 71 results (showing 5 best matches)
- I.R.C. § 2612(a)(1)(A) ........................................................ 56
- I.R.C. § 6901(a)(1)(A)(iii) ................................................ 107
- I.R.C. § 170(b)(1)(A)(ii) ................................................... 341
- I.R.C. § 691(a) ................................................................... 85
- I.R.C. § 691(a)(1) ............................................................... 86
- Open Chapter
Advisory Board 6 results (showing 5 best matches)
Table of Treasury Regulations 26 results (showing 5 best matches)
- Reg. § 1.1015–1(a)(2) ........................................................ 51
- Reg. § 1.691(a)–1 ............................................................... 85
- Reg. § 20.2013–1(a) ......................................................... 419
- Reg. § 20.2031–2(a) through (d) ..................................... 303
- Reg. § 20.2031–8(a) ................................................. 253, 264
- Open Chapter
- Publication Date: October 30th, 2015
- ISBN: 9781634595803
- Subject: Taxation
- Series: Nutshells
- Type: Overviews
- Description: This comprehensive guide can serve either as a course supplement or as a refresher for members of the bar. Expert commentary summarizes the law and offers critical perspectives on the estate, gift, and generation-skipping transfer taxes, including lifetime and testamentary transfers, joint-and-survivor tenancies, life insurance, annuities, and powers of appointment; inclusion and valuation; exemptions and exclusions; deductions; and tax liabilities. Additional chapters cover basic tax and estate planning concepts, reform proposals, and fundamental alternatives to the current transfer tax system.