Billionaire 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.

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.

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 executor refuses to elect portability?  Take them to court, of course.

In In the Matter of the Estate of Vose, the decedent and her spouse entered into an antenuptial agreement prior to their marriage, which provided:

6.1 Waiver: Except as otherwise specifically provided in this Agreement, [Spouse] and [Decedent] mutually waive, discharge, and release each other to the fullest extent lawfully possible from any and all claims

The 7520 rate for April 2017 has increased to 2.6%.

The April 2017 Applicable Federal Interest Rates can be found here.

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

PLR 201642019

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

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