Tax Alert

• Publication year: 2022

TAX ALERT

Written by Elizabeth T. Pierson, Esq.^*

This article summarizes selected developments in federal and state taxation law since the last issue of the Quarterly that may be of interest to trust and estate attorneys.

I. FEDERAL ADMINISTRATIVE & LEGISLATIVE ACTIVITIES

A. Proposed 20% Minimum Tax for Ultra Wealthy

H.R. NO. 8558, 117TH CONG., 2D. SESS. (2022)

The Billionaire Minimum Income Tax Act has been introduced. The tax would require that very wealthy individuals (net worth of $100,000,000 or more) and trusts pay a 20% minimum tax on annual income and annual unrealized capital gains.

B. Extension of Late Portability Election

REV. PROC. 2022-32, 2022 IRB 101 (JULY 8, 2022)

The IRS has extended the relief for taxpayers to make a late portability election without obtaining a private letter ruling. The Revenue Procedure allows a taxpayer to file a late estate tax return to make a DSUE portability election up to five years after the decedent's death (the previous limitation was two years). However, this relief is available only if the executor was not otherwise required to file an estate tax return and the executor had not filed a timely estate tax return.

C. Proposed Regulations—Estate Tax Deductions

REG-130975-08, 87 FED.REG. 38331 (JUNE 28, 2022)

The IRS has proposed regulations concerning the use of present value principles in computing the amount of a section 2053 deduction for the present value of a contingent recurring obligation payable after an extended post-death period. The proposed regulations provide a means of making deductions in advance that could otherwise only be taken as the deducted amounts are actually paid. The proposed regulations apply to recurring interest on estate taxes and penalties, interest on certain obligations of the decedent and personal guarantees made by the decedent.

II. FEDERAL CASES AND RULINGS: ESTATE TAX, GIFT TAX & GENERATION-SKIPPING TRANSFER TAX

A. No Deduction for Gift to Donor-Advised Fund for Anticipatory Assignment

KEEFER V. U.S. (N.D.TEX. 2022) 130 AFTR 2D 2022-5406

A taxpayer who claimed to have given a limited partnership interest to a donor-advised fund was denied a charitable deduction because the taxpayer did not provide an adequate contemporaneous written acknowledgment and the appraisal was insufficient. Moreover, the transfer was of an anticipatory assignment of part of the partnership income and not a gift of the partnership interest under the terms of the purported gift document. The agreement was merely an...