Estate Planning & Estate Tax Planning
Gift Tax Adequate Disclosure Related to Proposed Regulations
While the proposed Code Section 2704 regulations are still in limbo, along with other regulations that may indirectly impact 2016 gift tax returns, it is recommended that Practitioners filing gift tax returns add a specific disclosure statement if the gift tax return does not adhere to the proposed regulations. Under Treasury Regulation Section 301.6501 (c)(1) in order to satisfy the adequate disclosure requirements and therefore begin running the statute of limitations period for a gift tax return, a taxpayer must include a statement describing any position that is taken contrary to any proposed temporary or final regulation. As such, specific to Code Section 2704, to start the statute of limitations period, it is advisable to include on the return a statement noting that the value of a gift may not be consistent with the proposed 2704 regulations issued on August 4, 2016.
Kindly visit our Estate Planning and Estate & Gift Tax Planning websites for more information on this topic.
Reference: Barbara A. Little, Tax Updates, Philadelphia Estate Planning Council (2017)
THE GIFT TAX: ANNUAL EXCLUSION VERSUS THE LIFETIME EXEMPTION
One of the topics that cause the most confusion when discussing gift taxation is the difference between the annual exclusion from gift tax and the lifetime exemption. Part of this confusion likely stems from the fact that people think they should be able to give their property away during their lifetime with no tax consequences and partially from the difference between federal and state estate/gift tax laws.