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Recent Estate and Gift Updates

In Fisher,106 AFTR2d 2010- 6144 (DC Ind), the operating agreement of a limited liability company provided that the limit liability company had the first right of refusal if a child’s interest in the company were sold and payment would be made by promissory notes. The Court agreed with the Internal Revenue Service and applied section 2703 (a) which provides that the value of any transferred property is determined without regard to restrictions on the right to sell or use the property. The taxpayer urged the Court to apply the exception to this law stating that there was a bona fide business arrangement. The Court found that such exception was present under the facts of the case as the Court found that there was no business interests being preserved with the transfer restriction. The Court cited the Holman case (which case was discussed at our Blog a few months back).

In the Estate of Jensen, T. C. M. 2010-182, a dollar for dollar discount was allowed in decedent’s estate for built-in long-term capital gains. This may be appealed to the Second Circuit.

Under Revenue Procedure 2010-40 (IRB 2010-46), no inflation adjustment  occurred on January 1, 2011, for the federal annual exclusion and therefore it remains at $13,000.

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