Recent Cases
 Court Reverses District and Upholds Verdict Against Tax Advisor Who Incorrectly Indicated No Estate Taxes Would Be Due Upon the Death of the First Spouse.
An attorney agreed to review plaintiff/client's personal finances for a fixed fee of $2,500, including trusts that had been prepared several years earlier. The attorney requested a copy of the trusts a number of times, but never got them. Nonetheless, the attorney still gave his recommendations to the client, including an assurance that no federal estate tax would be due upon the death of the first to die.
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Common Law “Mail Box Rule” Still Alive in Some Circuits: Sorrentino vs. IRS
The Supreme Court first acknowledged the common law mailbox rule in Rosenthal v. Walker , 111 U.S. 185 (1884):
“The rule is well settled that if a letter properly directed is proved to have been either put into the post office or delivered to the postman, it is presumed, from the known course of business in the post office department, that it reached its destination at the regular time, and was received by the person to whom it was addressed.”
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Internal Revenue Rulings IRS Issues Proposed GST Regulations for “Predeceased Parent Rule” Rule
(REG.-145988 - 03, issuing Prop. REG. § 26.2651-1, -2 and -3).
This document contains proposed regulations relating to the predeceased parent rule, which provides an exception to the general rules of section 2651 of the Internal Revenue Code (Code) for determining the generation assignment of a transferee of property for generation-skipping transfer (GST) tax purposes. These proposed regulations also provide rules regarding a transferee assigned to more than one generation. The proposed regulations reflect changes to the law made by the Taxpayer Relief Act of 1997 and generally apply to individuals, trusts, and estates. This document also provides notice of a public hearing on these proposed regulations.
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IRS continues to grant waivers of the 60-day time limit within which to make a tax free rollover if there is an indication that the taxpayer was disadvantaged through no apparent fault of his or her own, or had intended to make a rollover.
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Service continues to grant justified extensions in the case of innocent error in the estate tax area as well.
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S Stock Transferred to Grantor Trusts and to Disregarded Entities Deemed Owned by Grantor, and Therefore Does Not Cause Loss of S Corporation Status.
The taxpayer created irrevocable trusts for the benefit of his spouse and descendants and also created a 20-year GRAT. The S stock was transferred to one of the irrevocable trusts, and the balance of the stock to a partnership that was owned by the taxpayer, the second irrevocable trust and an LLC.
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