Statute Of Limitations Had Not Been Triggered By Failure Of Adequate Disclosure In Gift Tax Returns Filed By Decedent
In the estate and gift tax law litigation case of Estate of Sanders v. Commissioner, T.C. Memo, 2014, No. 14489-12 (May 26, 2014), the Tax Court denied the Estate’s request for partial summary judgment and ruled that the statute of limitations had not been triggered by the gift tax returns filed by the decedent.
In 2012, the IRS audited the estate of the decedent, who had died in 2008. As a result of the audit, the IRS assessed an increase in the taxable gifts of $3.2 million. The estate argued that the three-year statue of limitations for the assessment of gift tax had run.
The issue in this case was whether the decedent had made sufficiently adequate disclosure in the gift tax returns as to commence the three-year limitations period. The decedent had made gifts of shares of stock in the family farm supply distribution company every year from 1999 through 2008 and filed contemporaneous gift tax returns. However, the returns failed to disclose a subsidiary that was a closely held entity. The Court held that by failing to make this disclosure, which is required under Reg. 301-6501(c)-1(f)(2) (iv), the decedent had failed to “adequate[ly] apprise the Secretary of the nature of the gift” under IRC 6501(c)(9). Therefore, the statute of limitations had not expired before the gift tax assessment notices were sent by the IRS.
Reference: Margery J. Schneider, Esquire, Probate and Trust Law Section Newsletter, Philadelphia Bar Association (September, 2014, No.137, Page 14)
Filed Under: Federal Estate and Gift Taxes; Statute of Limitations; Adequate Disclosures; Estate Planning Gifts
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