GST: Predeceased Parent Rule and Deemed Allocation Prop. Regs.

• Author: Laffie, Lesli S.
• Position: AICPA Activities

The AICPA's Trust, Estate and Gift Tax Technical Resource Panel submitted comments to the IRS on the proposed regulations on the predeceased parent rule. That rule provides an exception to the generation-skipping transfer (GST) tax generation assignment rules that assign a higher generation to transferees when the transferee's parent is deceased.

The comments state that (1) Prop. Kegs. Sec. 26.2651-1 (b) exceeds statutory authority; (2) Example 6 in Prop. Regs. Sec. 26.26511 (c) should be clarified; and (3) the final version of Prop. Kegs. Sec. 26.2651-203) should clarify that the definition of "legal adoption" therein applies only to Sec. 2651(f)(1).

Deemed allocations: Sec. 2632(c) proposed regulations offer guidance on electing out of GST deemed allocations. The proposed regulations provide guidance for electing under Sec. 2632(c)(5)(A)(i) not to have the deemed allocation of unused GST exemption under Sec. 2632(c)(1) apply to certain transfers to a GST trust. The proposed rules also provide guidance for electing under Sec. 2632(c)(5)(A)(ii) to treat a trust as a GST trust.

The AICPA recommends removing the language "(including an automatic allocation to a direct skip, but not an indirect skip)" from the final version of Regs. Sec...