Each year, the couple's
annual gift tax exclusions would cover $28,000 of the $50,000 gift, reducing the amount they would report on a gift tax return and reducing the impact on their gift and estate tax exemptions.
In fact, it is sometimes possible to structure the trust's share of the premium to be lower than the allowable
annual gift tax exclusions.
They filed timely gift tax returns that consistently claimed
annual gift tax exclusions. Treeco purchased a third tree farm and eventually merged into Treesource, LLP.
Finally, the Second Circuit rejected
annual gift tax exclusions for over 40 checks a decedent wrote on her deathbed to family and friends.(15) She died before most of the checks had cleared.
If the trust may benefit generations lower than the grantor's children (i.e., in trust for child for life, remainder to grandchildren in continuing trust), the transferor must allocate a generation-skipping transfer (GST) exemption on a gift tax return to prevent a GST tax on distributions to such beneficiaries, even if the filing is not required for gift tax purposes because the gifts are within the grantor's
annual gift tax exclusions. A GST exemption must be allocated to all transfers to the trust, even with respect to those for which Crummey withdrawal powers are held by the grantor's children.
Commissioner,[2] which has been construed by some to allow
annual gift tax exclusions based on a contingent or "naked" Crummey power.
Commissioner, a strategy was devised, which is now accepted, to allow the
annual gift tax exclusions to be applied against the premium dollars to escape federal gift taxation on the amounts covered by this gift exclusion.
* INDIVIDUALS OR COUPLES CANNOT USE THEIR
ANNUAL gift tax exclusions to shelter QPRT transfers from tax.
The Service continues to attack the availability of
annual gift tax exclusions for transfers to trusts containing Crummey(19) withdrawal rights.
On the estate tax return, the interests of the 16 contingent beneficiaries were treated as qualifying for 16
annual gift tax exclusions under IRC section 2503(b) with regard to the decedent's 1990 transfer of the commercial building to the trust.
The estate treated the interests of the contingent beneficiaries as qualifying for 16
annual gift tax exclusions, which the IRS disallowed on the grounds that the decedent and the beneficiaries had an understanding that the latter would not exercise their withdrawal rights.
Consistent with AOD 1996-010, the IRS argued that substance-over-form doctrine should apply to deny 16 of the
annual gift tax exclusions claimed.
