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Estate and Gift Tax
Temple University School of Law
Mandelbaum, Kathy

 
Estate and Gift Tax Outline Mandelbaum Fall 2015 LLM
 
Class 1
3 taxes 1. Estate tax ch. 11 2. Gift tax ch 12 3. Gst tax 13 ch14 how we value transfers
Historical perspective- has inheritance tax in 1860’ it was simple tax all transfers at death but could give away all ur assets b/f death repealed and came back then 1924 got gift tax then repealed then came back then gst comes in 80’s b/c families gave to grandchildren to avoid taxes gst got repealed retroactiley it was so bad
Gst tax 1986 simple not amended much since if skip generation u get taxed so it’s a shadow tax
Gallo wine exception—in 80’s teacher draftd a lot of gallo trusts to avoid gst  so if u see lots of old 80’s trusts with lots of wealth that’s why – there are lots of regs
Transfer tax a mess with minority share
Income in respect to decdedent 691
Income basis issues 1014- step up to fmv get carry over bassis at death – huge eco policy b/c ppl hold on to low basis stock so get step up don’t choose investements based on performance….
Estate and gift tax 40%- whereas income slowly move up this is very progressive tax- income diff each year
In 80’s was 55% and lower exemption now 5.43 bush in 01 wanted to get rid b/c low exemption affecting lots of ppl so slowly added exemption and decreased tax rate then katrina and we need money lots of uncertainty 2011 12 13…….now it is permanent
End class 1
Class 2
Pro/con of estate tax 1. Generate vevenue used b/f wars- but not a lot of revenue/ most ppl don’t pay
Highly progressive so good for redistribution of wealth- incentive to work to generate money/ investment good for economy/ promote charitable stuff b/c 100% deduction with income there is cap
Bad- not a lot revenue/ put family business farm- now exeption for family farm can value not for best use – u can postpone tax over 10 yrs…../ fairness ur punishing work and saving/ double tax/ goes to ur charity which a lot is school and such if goes to gov broader base and goes to poorest
Unlimited marital deduction- whole family as unit- windser says gays get too/ transfer tax hard pplwith good lawyers pay less—100$ u pay income tax then die then pay again but that’s how our system works lots of recognition events anti paris Hilton v. death tax
Most who appose tax wont pay it- paid by less than 1% of ppl- don’t understand it
Constitutionality- direct tax needs to be apportioned this is tax on transfer on  an act not an asset- if tax thing unconstitutional
Transferor has privilege to transfer property ( some places in world cant do this- right to transfer privilege
Inheritance tax- tax on privilege of inheriting- so recipient focused-for feds care about transferor- only care if transferee is wife/charity
Math problem- 2503b- annual exclusion 14K also medical and school expenses/ charity spouse/ did u make prior gifts- u get 1 run up brackets- hard to find value of gift- do tentative tax- credit comes after proposed tax- so use chart in 2001c pg 144 (2117800) first 1 mil 345,800 plus 40% on excess- take our gross exxclusions/deductions/ less unified credit- finish gift then bosch then safe deposit
End class 2
Class 3
1031 exchange issue? For trade or business….. to get estate tax5.43 deduct 14k then exemptions/then unified credit 2505a1 (pag268) 2010c is estate tax one- estate and gift refer to each other- for gifts look to estate tax rates- add yearly exclusion add back prior gifts- b/c only go up brackets once- gst shadow tax next- if going to grandkids b/c kids dead then no worry about gst
Bosch- way to look at fed law ( ex. Marriage is it state or fed fed looks to state? Pa had common law b/f 2005 so needed evidence- joint tax return/go to court get declaratory judgement does fed have to give deference to state court decision- no b/c there was no controversy when first got judgement no witness no cross examination just ruber stamp- bosch says same feds give “proper regard” to lower court but do give difference to supreme court of pa b/c u need controversy to get that far- so no defference in bosch
End class 3
Class 4
Bosch- look at chart- husband creates trust for wife gives her gpoa so n her estate and gets unlimited marital deduction she doesn’t realize and tries to tu

fire?
2. art tech advise emeo- creepy guy soldier ww2 stole art mailed home to mom then died- siblings tired to sell and got caught- again illegal value- 10 yrs afer he died finaly family sells bak to german giv for 50 mil sister settled for penalty 135K – yes they included value on tax return
Hester- wife died left money to husband in trust then to her kids – they filed tax return then asked for erfund- but he was using money all the while using it so yes he exercised dominion and control without restriction- maybe if lawsit by kids to recover could use as deduction? Not sure which way it came out?
Barr case- kokack sotre had retirement benefit but subject to a bunch of diff requirments so guy died wife got money but not treated as part of estate b/c – not subject to tax- not a right to get property too many what ifs—teacher thinks wrong all busi could do this to give money tax advantaged
End class 5
Class 6
Still barr- Kodak always gave this out 100% of time- if put in manual that u get then taxable- u need legally enforceable right but neither art nor pot had that
If checks have not cleared but wrote bf death are they table- yes- check to charity counts as date written – public policy
Conneticut bank irs v. exec- settlement ppl hit by trust everyone died immediately 2 causes of action-
This case just 1 fro damages against trucking copany proceeds from settlement 1. Survival action 2. Wrongful death- survival action survies decdent- pain and suffering/loss of wages/loss of life
Wrongful death- statutory- not estate family mmber brings claim- loss of consortium/ loss of earning/ loss to family- can have overlapping damages- pa has both conecticut only had 1