- quote -

For this purpose the "present value" is completely
irrelevant. It has no effect on the annual exemption for
gift tax purposes, since the exemption did not apply either
to a present or a future value.

In addition, the present value would have no relevance to
the amount of the gift taxable in the donor's gross estate,
since the entire value is included.

What possible relevance could "present value" have in this
case?

Stu

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- quote -

Except there was never a time when the value was $140,000.
Even at death, the present value was less.

Seth

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- quote -

Right. Except that either because the donor kept control
over the funds during his lifetime (§2036) or because the
transfer was to take effect at death (§2037), the entire
$140,000 value would be included in the estate.

Stu

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"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

I believe you are correct. I think I was getting confused
as I reflected back on prior tax law. Thanks for the
discussion.

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- quote -

Except the value at the time the gift was made was $10,000
per year for 14 years starting at an unknown (but
actuarially determinable) time in the future; the present
value at that time would have been considerably less than
$140,000.

Seth

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Lynn Guini wrote:
- quote -

OK, but at death, that future interest becomes a present
interest that is distributable, so why wouldn't its face
value at that time be includible in the estate?

As I stated previously, the only thing this does is avoid
probate for the amount.

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Lynn Guini wrote:
- quote -

Of course. But where is the present interest here? If
someone makes a gift and the donnee can't get access to
spend that money within a fairly short time (30 to 60 days
the last time I checked), it will necessarily be considered
a gift of a future interest.

As a result, when making a gift that will not be distributed
until after the death of the donor, the entire gift is of a
future interest.

Stu

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"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

I believe the value of the FUTURE interest, not of the
entire interest, needs to be included on the gift tax
return. The gift is not of the entire interest, but of the
FUTURE interest.

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"Lynn Guini" <nonono[at]nn.com> wrote:
- quote -

No tax savings because one way or the other, it was either
in the estate at death or a taxable gift of future interest
during life.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Dan Evans wrote:
- quote -

I'm aware of that. You aren't the only one who chose to
quote ONLY my first paragraph and omit the second - which
you may find more operative....

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Nan Eklund wrote:

- quote -

Leaving aside the issue of whether there was a completed
gift that would result in the situation presented, it's
still not much help, if any.

Remember that, as gifts of future interest they do not
qualify for the annual exclusion. As a result the entire
$140,000 was required to be included on gift tax returns.
That decedent's lifetime exemption would then be reduced by
$140,000, which has the same effect as including the money
in his taxable estate.

Stu

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"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

ok, now I found it: The entire value of any gift of a future
interest in property must be included in the total amount of
gifts for the calendar period in which the gift is made. See
Sec. 25.2503-3.

http://a257.g.akamaitech.net/7/257/2...access.gpo.gov
/cfr_2002/aprqtr/26cfr25.2503-3.htm

so, the gifts have used up the unified credit some (the
value of the future interest, whatever that value might be -
certainly less than $140,000), but the entire amount of the
$140,000 is not included in the estate. Sounds like some
net tax savings.

now, comments please.

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"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

Still in Theory Mode . . .

I couldn't find 2503(b)(1) on the web, but I did find this:

Example (2). The decedent transferred property in trust
with the income to be accumulated for the decedent's life,
and at his death, principal and accumulated income to be
paid to the decedent's then surviving issue, or, if none, to
A or A's estate. Since the decedent retained no reversionary
interest in the property, no part of the property is
includible in the decedent's gross estate, even though
possession or enjoyment of the property could be obtained by
the issue only by surviving the decedent.

this is from CFR § 20.2037-1 Transfers taking effect at
death.

http://ecfr.gpoaccess.gov/cgi/t/text...6d480bf0556fbe
b5c8219f7adf7&rgn=div8&view=text&node=26:14.0.1.2. 23.0.6.40&idno=26

this is still Greek to me, which is why I said "still in Theory Mode".

comments?

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- quote -

So it was intended to be an annual gift (which I think is
correct) but failed because the decedant didn't give it
annually. There's no problem about the heir getting it;
he's the only beneficiary. He also has to pay the estate
tax on it because the decedant was 1)lazy, 2)mean, 3)didn't
understand the law, 4)old and failing, 5) any of the above.

I think the answers - and thank you all - indicate that
there is no deduction. It was an incomplete gift. He pays
the tax.

Nan, EA in LA

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- quote -

I like this very much. I'll go back to the 706 and see where
a "gift in trust" fits in and how the $140,000 can be
removed.

Nan, EA in LA

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- quote -

Back to the drawing boards......darn.

Nan, EA in LA

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D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

If that was the intent, then it failed, because the gift tax
annual exclusion does not apply to "future interests" and
annuity payments that do not even begin until after death
are clearly future interests.

*Dan Evans
*Author of the Tax Protester FAQ
*http://evans-legal.com/dan/tpfaq.html

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D. Stussy wrote:

- quote -

Hmmm...that ~is~ interesting. However, I suspect that the
"to be paid after my death" provision would negate this as
an excludable CURRENT interest. Still, your theory sheds
some light on what the decedent possibly intended.

MTW

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Lynn Guini wrote:
- quote -

Sorry, but that's not what the law is.

First of all, to be a gift it must be "completed." The
donee must know about the gift and accept it.

- quote -

Ok, let's assume it was a completed gift, but one in trust.
Since it was to be paid after death it was a gift of a
future interest, not of a present interest. Gifts of future
interests do not qualify for the $10,000 exclusion. See
§2503(b)(1).

Stu

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- quote -

I have not done much with estate and gift taxes. However,
there are two items I think that you should look at. First,
I don't believe that the annual 10K gift exclusion applies
to future interests. The above sounds like it could be a
gift of a future interest ("paid after my death"). Second,
I would think that section 2036 (transfers with retained
life estate) may apply to include the gifts even if they
were gifts made in trust.

Good luck.

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