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30 Rock, Oysters, and Generation-Skipping Transfer Tax

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Billionaire David Rockefeller, the grandson of John D. Rockefeller, passed away recently at the age of 101.  In 2017, Forbes estimated that his fortune, investments in real estate, share of family trusts, and other holdings were worth $3.3 billion.  However, because of his family history, it is quite possible that a large portion of that $3.3 billion will not be subject to the estate tax upon his death.

Benefactors Beware: Fake Charities Included in IRS List of Top Tax Scams for 2017

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Written by Emily Manns and originally posted on BryanCaveCharityLaw.com

Every year, the IRS issues its “Dirty Dozen” Tax Scams list, a compilation of tactics and devices used by scam artists against taxpayers.  While the threat exists year-round, the IRS promulgates the list ahead of filing season. As susceptible taxpayers prepare their returns, they face a higher risk of being targeted.

Charitable Income Tax Deductions: The Rockefeller Edition

rockefeller-center-midtown-west--new-york-city-new-york-usa_mainBillionaire David Rockefeller passed away this week at the age of 101.  According to Forbes magazine, during his lifetime, the well-known philanthropist gave away nearly $2 billion.

In light of this newsworthy charitable donation, we thought now would be a good time to remind everyone of some of the basic income tax deductions available for gifts to charities.

Court Orders Administrator To Elect Portability

The following was written by Luke Lantta of Bryan Cave’s fiduciary litigation team and originally posted here

When the IRS enacted the portability election provisions in 2011, which allowed estates of married taxpayers to pass along the unused part of their estate and gift tax exclusion amount to their surviving spouse, it remarked that it “expect[ed] that most estates of people who are married will want to make the portability election. . . .”  But, to elect portability, an estate tax return must be filed in order to pass along the exclusion.  So, what happens when an executorrefuses to elect portability?  Take them to court, of course.

THE STATUTE “SAYS WHAT IT MEANS AND MEANS WHAT IT SAYS”

U.S. v. McNICOL 829 F.3d 77 (1st Cir. 2016) (cert. denied 1/9/2017)

Trusts and Estates practitioners often focus solely on the Tax Code found in Title 26 of the United States Code and ignore other parts of the United States Code (U.S.C.). However, it is a mistake to do so as Marci McNicol learned first-hand. In this case, the Federal Priority Statute found in 31 U.S.C. § 3713 came into play to impose liability on Marci for the decedent’s unpaid Federal income tax liability.

Here, at the time of his death, the decedent owed over $300,000 in Federal income taxes. As a result of this and other liabilities, the decedent’s estate, which consisted almost entirely of interests in two closely held companies, was insolvent. Marci, the decedent’s widow, transferred decedent’s interest in one of the companies to herself even before the court had appointed

COPYING IS BEST IN THE ING WORLD

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Not only is strict adherence to the structure set out in prior favorable rulings best, it is essential when it comes to obtaining a favorable ING ruling. The provisions in the trust document need to carve a very fine line through the grantor trust/incomplete gift rules to obtain a favorable ING ruling. The goal is to have the Service rule that a trust is not a grantor trust for income tax purposes yet not a completed gift for gift tax purposes and included in the grantor’s estate to get a basis adjustment at death.

The earliest ruling, ILM 201208026, fell short of a favorable ruling with the Service finding that the retained testamentary power of appointment was insufficient to avoid a completed gift. By 2014, practitioners had carefully studied this early ruling and devised a set of trust provisions that

NO AUTOMATIC CLOSING LETTER, BUT WAIT – THERE ARE ALTERNATIVES

IRS Notice 2017-12

The Service issued FAQs in June of 2015 to let practitioners know that they were no longer routinely issuing closing letters. The Service instructed practitioners that they would now have to request such a closing letter, but could not do so until 4 months after filing the estate tax return. Their goal was to reduce the amount of work the Service needed to complete as a cost cutting measure. However, taxpayers need closure and the requests for closing letters almost became routine. Because so many practitioners were routinely requesting closing letters, the Service let it be known informally, with a posting on its website, that a transcript could be requested, and would be an acceptable substitute for an estate tax closing letter. But requesting such a transcript has not been a simple matter, with many groans of frustration along the way. The Service has now provided guidance

President Elect Trump’s First 100 Days

What he wants to accomplish vs. what he needs to accomplish…

As the United States rings in a New Year, it also welcomes a new president. All eyes are trained on Washington in anticipation of what President-elect Donald Trump will tackle in his first 100 days in office. Trump’s initial success will depend on how well he defines his own agenda and how he navigates the difference in details between his goals and the policy priorities of Congressional Republicans. Trump will also need to divide his political capital between the things his administration wants to do versus what it needs to do in the New Year.

Click here to read the Alert by David C. Russell and Miguel Rodriquez.

Comparison of Current Tax Rates, Trump Proposed Rates and Republican Blueprint Proposed Rates

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While there is considerable uncertainty among wealth planners and tax professionals regarding how the incoming administration will impact the federal tax code, nearly everyone agrees that change is imminent. With that in mind, we have assembled this chart, which compares current tax rates with President-elect Donald Trump’s proposed tax plan, and the House Republicans’ Blueprint plan (released in June, 2016).  Click here.

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