THE GROSS ESTATE: PROPERTY OWNED AT DEATH
Property Owned at Death: § 2033
· Decedent’’ Interest in Property
o2033 – value of GE includes all property to extent of Δ’s interest at time of death. 2033 brings into GE wide range of unliquidated, speculative, contingent, and defeasible claims and interest, even though value not readily ascertainable.
§ Barr’s Estate – Δ’s ER year-end wage dividend not includable in GE b/c no more than “hope or expectancy” SS might receive it and Δ could not reduce to his possession (i.e., not a vested interest).
oInterests Created at Death – Δ, in his lifetime, never had an interest, therefore not includable. Ex. Wrongful death, “survival type” actions
§ Exception: Proceeds representing damges to which Δ would’ve been entitled during life (ex. Pain & suff or med exp) are included.
oInterests Terminating On/Before Death – not includable (e.g. life interest), tax measured by value of assets xfered by reason of death. However, debt owed to Δ may be cancelled by will is function’l equiv to bequest and included in GE b/c T loses ability to revoke.
§ Goodman v. Granger – EE’s series of K’s w/ ER for salary + “conting benefits” (upon providing services and compliance w/ noncompete) valued at PV for GE b/c K’s no longer conting, “death ripened int in deferred pmts into absolute one”
o Post-Death Events – FMV requires consid of all relevant facts and elements of value as of DOD, usually only permitted if “reasonably foreseeable’ at valuation date to be taking into acct “for limited purpose” of establishing what willing buyer and sellers’ expectations would be.
· Dominion & Control as Ownership
oEstate tax based on Δ’s poss’n of economic benefit of property.
§Tech. Advice Memo – Δ’s possession and control and power of disposition when his plane crashed, over weed tantamount to ownership, includible at FMV, no casualty deduction b/c undermine of PP.
oA trust is includible in grantor’s GE if he retained
§Power to alter, amend, revoke, or terminate
§Rt to posses or control income
oAn unexercised GPOA over property does not compel inclusion in Δ’s GE. Only exercised powers are included
oValue includible in Δ’s GE = FMV at DOD = price property would change hands b/w a willing buyer and a willing seller, neither being under any compulsion to buy
ance from someone else (i.e. T’s did not themselves acquire the property), or
§(2) Survivor or survivors furnished par or all the CNS w/ which property was acquired (economic source rule)
· Goldborough’s Est. – Δ mom gave appreciated prop to 2 daughters, who sold prop and used proceeds to buy stock, which all 3 held in JTWROS. Mom died, each daughter received her share and the stock was excludable to extent CNS furnished by daughters (appreciation of property).
· If Δ, before acq of property by himself and other JT, gave latter $/prop which thereafter became other JT’s entire contribution to purchase, then value of entire property included in Δ’s GE.
oGift tax on creation/termination of JT
§If A uses own prop to creat JT w/ child B, A makes completed gift of ½ value of property
§If A creates JT w/ B while retaining rt to regain entire prop w/o B’s consent à no complete d gift until B actually receives some/all of prop.