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Musings On Current Events
by Steve R. Akers
Succinct summaries of the significant recent developments in trust, estate and tax law

Estate Planning Current Developments and Practical Planning for Estates Under $10 Million (August 2014)

ACTEC 2014 Summer Meeting Musings (July 2014)

Material Participation by Trust for Passive Loss and Medicare Tax Purposes; Technical Advice Memorandum 201317010 and Pending Tax Court Case (June 7, 2013)
IRS Position Requiring Trustee Direct Involvement in Business Operations; Limitations on Naming Co-Trustee Who Is Involved in Business Operations to Satisfy Material Participation Requirement; Pending Tax Court Case

ACTEC 2013 Annual Meeting Musings (March 2013)

Estate of Elkins v. Commissioner, 140 T.C. No. 5 (March 11, 2013)
Fractional Interests in Art Valued With 10% Discounts Considering Likelihood That Family Members Would Purchase Hypothetical Purchaser?s Fractional Interest

Private Letter Rulings 201310002-201310006 (March 8, 2013)
Favorable “DING Trust” Letter Rulings; Confirmation of IRS’ss Position That Settlor’s Retention of Testamentary Power of Appointment Does Not Necessarily Cause Full Transfer to Trust to be Incomplete Gift

Heckerling Musings 2013 and Other Current Developments (February 2013)
The Estate Planner’s “Playbook” for 2013 and Going Forward Under the Post-ATRA “New Normal” of Permanent Large Exemptions and Portability

ACTEC 2012 Fall Meeting Musings (December, 2012)

Keller v. U.S., AFTR 2d 2012-XXXX (5th Cir. September 25, 2012)
“Partnership Recognized Although Not Formally Funded Before Decedent?s Death; Interest on Recharacterized Loan From FLP Loan to Pay Estate Taxes and Other Obligations is Deductible For Estate Tax Purposes

ACTEC 2011 Fall Meeting Musings (December, 2011)

ACTEC 2011 Summer Meeting Musings (July, 2011)

Estate, Gift and Generation-Skipping Transfer Tax Provisions of ?Tax Relief... Act of 2010,? Enacted December 17, 2010

Estate of Jensen v. Commissioner, T.C. Memo. 2010-182 (August 10, 2010)
“Built-In Gains Tax Discount” Allowed in Valuing C Corporation Based on Present Value Analysis of Corporate Income Tax Liability on Eventual Sale of Assets, Taking Into Consideration Anticipated Future Appreciation in Corporate Assets.

Estate of Margot Stewart v. Commissioner, 106 AFTR 2d 2010-XXXX (2d Cir., August 9, 2010), vacating and remanding, T.C. Memo. 2006-225 (2006)
Application of § 2036 to Transfer of 49% Interest in Combined Residential and Rental Property Where Donor Continued to Live in House with Donee-Son and Received All Income. Some Portion of Transferred Property Will Be Excluded From Estate, Which Allows Substantial Fractional Interest Discounts

Holman v. Commissioner (Apr. 7, 2010)
Eighth Circuit Affirms Tax Court’s Application of Section 2703 to Transfer Restrictions in Partnership Agreement and Its Finding of Low Marketability Discount Based Partly on Assumption That Remaining Partners Would Purchase an Exiting Partner’s Interest, Holman v. Commissioner, 105 AFTR 2d ¶ 2010-721 (8th Cir. April 7, 2010) aff’g 130 T.C. 170 (2008)

Petter v. Commissioner, T.C. Memo. 2009-280 (Dec. 7, 2009)
Defined Value Clause Upheld; “One-Two Punch” to IRS’s Fight Against Defined Value Clauses

Estate of Christiansen v. Commissioner, 104 AFTR2d 2009-XXXX (8th Cir. Nov. 13, 2009, corrected Nov. 18, 2009)
Eighth Circuit Upholds Formula Disclaimer Over Public Policy Objections (or “Friday the 13th Massacre of IRS Position on Defined Value Clauses”)

Final Regulations Under Section 2053 Governing Estate Tax Deductions for Administration Expenses and Claims Against Estates (November 2009)

Estate of Murphy vs. United States, U.S. Dist. Ct. W.D. Ark. El Dorado Division, Case No. 07-CV-1013 (October 2, 2009)
Total Taxpayer Victory in FLP Case Involving §2036, Rule 144/Blockage Discounts, FLP Discounts, and Graegin Loan

Estate of Malkin v. Commissioner, T.C. Memo. 2009-212 (September 16, 2009)
IRS Defeats Aggressive FLP Planning; Issues Involving §2036, Indirect Gifts, and Sham Sales and Loans

Keller v. U.S., Civil Action No. V-02-62 (S.D. Tex. August 20, 2009)
$40 Million Taxpayer Victory; Partnership Recognized Although Not Formally Funded Before Decedent’s Death; 47.5% Discount Allowed For Assignee Interest in Limited Partnership Holding Bond Portfolio; Bona Fide Sale Exception to Sections 2036 and 2038 Applied; Interest on Loan to Borrow Money From Partnership After Death to Pay Estate Taxes and Other Obligations Is Deductible For Estate Tax Purposes

Pierre v. Commissioner, 133 T.C. No. 2 (August 24, 2009)
Transfers of Interests in Single-Member LLC Treated as Transfers of Interests in the Entity Rather Than as Transfers of Proportionate Shares of the Underlying Assets (Without a Discount)

Heckerman v. U.S., U.S. Dist. Ct., W.D. Washington, Cause No. C08-0211-JCC (July 27, 2009)
Contributions of Cash to LLC and Gifts of LLC Interests on the Same Day Treated as Indirect Gifts and as Step Transaction to Eliminate Discounts for Gift Tax Purposes

Heckerman v. U.S., U.S. Dist. Ct., W.D. Washington, Cause No. C08-0211-JCC (July 27, 2009)
Contributions of Cash to LLC and Gifts of LLC Interests on the Same Day Treated as Indirect Gifts and as Step Transaction to Eliminate Discounts for Gift Tax Purposes

Linton v. U.S., U.S. Dist. Ct. W.D. Washington, Cause No. C08-227Z (July 1, 2009)
Contributions of Property to LLC and Gifts of LLC Interests on the Same Day Resulted in Application of Indirect Gift and Step Transaction Doctrines to Eliminate Any Discounts for Gift Tax Purposes (July 21, 2009)

Estate of Jorgensen, T.C. Memo. 2009-66
Section 2036 Applied to Creation of FLPs; Equitable Recoupment Allowed to Adjust for Prior Income Tax Overpayments in Light of Increase in Basis Attributable to Increased Gross Estate Value (March 26, 2009)

Bianca Gross v. Commissioner
Tax Court Rejects Indirect Gift Attack for Gift of Partnership Interest At Least 11 Days After Contribution of Stock Portfolio to Partnership, Bianca Gross v. Commissioner, T.C. Memo 2008-221 (September 29, 2008)

Holman v. Commissioner
Tax Court Rejects Indirect Gift Theory For Gifts of Partnership Interests After an FLP is Formed and Applies Section 2703 to ransfer Restrictions, Holman v. Commissioner, 130 T.C. No. 12 (May 27, 2008)

Astleford v. Commissioner
Tier Discounts Allowed; Substantial Lack of Control and Marketability Discounts Recognized for Parent and Subsidiary Real Estate Partnerships, Astleford v. Commissioner, T.C. Memo. 2008-128

Mirowski v. Commissioner
T.C. Memo. 2008-74; Court Rejects IRS’s §§2036(a)(1), 2036(a)(2), 2038, and 2035 Arguments

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