Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

Certain Changes Effective in 2019

The gift, estate and generation-skipping exemptions are $11.4 million per taxpayer in 2019. Keep in mind that if a Credit Shelter Trust was earlier created at the death of a family member, that trust ordinarily will not be included in the estate of the beneficiary. With the larger estate tax exemption, the family may not care about estate tax inclusion, but they may want a “stepped up basis” for the assets in the trust at the death of the current beneficiary to minimize capital gains taxes. If this applies to your situation, you probably need to take some actions now in order to obtain the stepped-up basis for the trust assets on the death of the current beneficiary.

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Tax Update

This Tax Update article is authored by Laurie A. Hunter, Kevin D. Millard, Jonathan F. Haskell and Heidi J. Gassman.

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IRS Determines no Statute of Limitations on Gifts Not Fully Disclosed on 709s

It is important to fully disclose gifts on U.S. Gift Tax Returns (Forms 709), because otherwise, no statute of limitations runs on the gift and possible gift tax. In Legal Advice issued by Field Attorneys 20152201F (issued September 2, 2015), IRS concluded a taxpayer failed to disclose gifts to his daughter in a manner that would start the 3-year statute of limitations. Here, the taxpayer attached a short paragraph to his Form 709 stating that partnership interests were given to his daughter; the partnership assets were primarily farm land and an appraisal of the land had been obtained (but was not filed with the return). The statement also said that discounts were taken for "minority interests, lack of marketability, etc." to determine the fair market value of the gifts reported on the return. IRS concluded the gifts were not adequately disclosed because (1) the partnership interests were not described as either general or limited partnership interests, (2) the partnerships were not correctly identified, (3) no appraisal of the partnership interests was included, (4) no restrictions on the transferred interests were described (such as those contained in the limited partnership agreements) giving rise to any discounts, and (5) the full value of the partnerships based upon the appraised farmland was not disclosed.

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