The U.S. Tax Court today in a “reviewed opinion” granted the IRS motion for partial summary judgment, holding that the value of cash and securities transferred within days of death to a limited partnership was includible in the decedent’s estate.
The case is: Estate of Powell v. Commissioner, 148 T.C. No. 18 (May 18, 2017). Read the Tax Court’s opinion [PDF 186 KB]
The facts reveal the following timeline:
The Tax Court majority focused on the decedent’s right to dissolve the limited partnership and additionally on the fact that the decedent’s partnership interest was transferred less than three years before her death, and concluded that the value of the cash and securities transferred to the limited partnership was includible in her gross estate under section 2036(a)(2). The majority opinion also found that the son lacked authority under state law to transfer the decedent’s limited partnership to the charitable lead annuity trust, thereby the value of the 99% limited partnership interest was includible in the estate under section 2033 or section 2038(a).
As part of this decision, there is an opinion “concurring in the result only” of seven judges that describes the transactions as “aggressive deathbed tax planning.”
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.