IRS Loses in E&G Tax Case

IRS Loses

The Tax Court recently denied an IRS motion for summary judgment in an estate and gift tax case where an elderly mother made gifts to her daughters, while requiring them to pay all tax liabilities due if she happened to die within three years of making the gifts.  In the calculation for gift tax purposes, the mother reduced the value of the gifts by the estimated tax liability.  This reduction was denied by the IRS.  For the full details on this fascinating case, visit the Journal of Accountancy website.  

“The Tax Court also rejected the argument that under the estate-depletion theory, any benefit in money that might arise from a donee’s assumption of the Sec. 2035(b) tax accrued to the benefit of the donor’s estate rather than to the donor and thus could not be used to reduce the value of the gift.”