Transfer incident to divorce not sheltered from all tax
Article Abstract:
Sec 1041 of the tax code holds that transfers of property to a former spouse are to be treated as gifts if the transfers are incident to divorce. No gain or loss is recognized on such transfers. Transferee spouses under these circumstances receive the tranferors' adjusted basis in the property. Under temporary regulation 1.1041-IT(c), this deferral of tax consequences also applies to transfers from spouses to third parties that are made on behalf of spouses or former spouses. This temporary regulation allows deferrals for third party transfers in only three instances, namely, when transfers to third parties are required by divorce or separation instruments, are made upon written requests of former spouses or are made after written consent of former spouses is given.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Special valuation rules apply to estate's timberland
Article Abstract:
A decedent managed a property left to her by her deceased husband and, some time later, harvested some of the timber on the land and sold it. She subsequently died, and the estate filed its estate tax return. At this point, the timber was mature and ready for harvest although no timber had ever been harvested from the property except for that one time. An amended estate tax return was filed a year after the first filing that elected the special use valuation covered by Sec 2032A of the tax code and the qualified woodlands election under Sec 2032A(e)(13) for the timber. The IRS allowed this but ruled that recapture tax provisions of Sec 2032 did not function as an encumbrance on the timber that would lower its value for estate tax purposes.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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