June 22, 2022 - Douglas Myser

IRS proposes regulation to estate tax. The IRS in regulation 118913-21, provided an exception to the "clawback" rule that preserves the benefits of the temporary higher and gift tax basic exemption exclusion amount. The special IRS rule that preserves the benefits of the estate and gift tax payable on the decedent's lifetime gifts. Left for later in the 2019 final regulations was the question of how to handle for purposes of the special rule gifts that are not true inter vivos (during lifetime) transfers but are includible, or treated as includible, in the decedent's gross estate. The proposed regulations issued would address that question by providing an exception to the special rule for such transfers, as well as certain eliminations and relinquishments. IRS proposes regulation to estate tax.

Those eliminations include gifts that are subject to a retained life estate or subject to other powers or interests as described in Sections 2035 thru 2038 and Section 2042. Gifts made by enforceable promise, to the extent they remain unsatisfied as of he date of death. Transfers of certain applicable retained interests n corporations or partnerships (section 2701) or trusts (Section 2702) and Transfers that would have been described in the preceding three bullet points but of the transfer, relinquishment or elimination of an interest, power, or property, effectuated within 18 months of the date of the death of decedent, by the decedent in conjunction with any other person, or by any other person.

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