Recent developments in estate planning: Part 1

October 1, 2020

By Justin Ransome, CPA, J.D., Tax Insider

EXECUTIVE SUMMARY

  • Proposed regulations explain the effect on trusts and estates of the suspension of miscellaneous itemized deductions under the law known as the Tax Cuts and Jobs Act, including guidance on how excess deductions are treated once the estate or trust terminates.
  • The IRS ruled privately that the termination of a generation-skipping transfer (GST) tax-exempt trust and the proposed distribution of the trust assets to beneficiaries will not cause the trust, or any terminating distributions from the trust, to be subject to GST tax or gift tax.
  • A defined-value clause in the transfer instruments for a taxpayer's transfers of a family limited partnership (FLP) interest resulted in a transfer of a percentage interest in the FLP and not of fixed dollar amounts, according to the Tax Court.
  • The Tax Court held that tax-affecting the earnings of an S corporation and limited partnership was appropriate in determining their value under the discounted-cash-flow method of valuation.
  • The Tax Court rejected the IRS's attempt to determine the gift tax valuation of 99.8% interests in two LLCs, which the taxpayer transferred to a GRAT, by determining the value of the remaining interests in the LLCs that were not transferred.
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