Article Abstract:
IRS rulings and tax cases on trust, estate tax, minority discount and generation-skipping transfer tax issues in 1995 should be incorporated into practitioners' reviews of estate plans in 1996. Two cases were decided in favor of the taxpayer regarding discounts on close corporation stock for lack of marketability and lack of control. An IRS ruling affirmed the nonrecognition of gain for assets repurchased from a grantor trust. Anticipated legislative changes include increased exemptions under the estate, gift and generation-skipping transfer tax schemes.
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Article Abstract:
Legislative, judicial, and administrative changes in tax law in 1997 create a need for estate planners to review estate plans with their clients in 1998. The Taxpayer Relief Act of 1997 made several important changes including those to the unified credit and charitable remainder trusts and added an exclusion for family-owned businesses. IRS action in the areas of family limited partnerships, Crummey powers, and net income makeup charitable remainder trusts (NIMCRUTs) may affect estate plans, as well as the US Supreme Court's decision in Estate of Hubert.
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Article Abstract:
IRC section 2033A, created by the Taxpayer Relief Act of 1997, contains an estate tax exclusion for estates which are constituted primarily by family-owned businesses. The benefit of the exclusion is tenuous because the eligibility requirements and recapture rules are complex and burdensome. Additionally, the exclusion is effectively phased out over a ten year period concomitantly with the phase in of the unified credit until it becomes only a $300,000 exclusion. Time will tell if the benefits to family-owned businesses are worth the efforts.
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