Interest on loan to pay estate tax was deductible

Article Abstract:

The Tax Court found in its memorandum opinion in McKee that the estate was entitled to deduct interest from a loan entered into to pay estate taxes because the loan was allowable under local law and was a necessary expense incurred by the estate. The IRS argued both that the will dictated that IRC section 6166 installment payments be elected and that the interest should not be deductible when the promissory note involved was generating interest income in equal amounts. The Court found that the will did not require the section 6166 election nor did it compel redemption of the estate's stock.

Public Finance Activities, Personal Income Tax Deductions, Taxation, Laws, regulations and rules, Interest deductions, Tax deductions, Powers and duties, Personal income tax, Decedents' estates, Estate tax, Estate taxes, Executors and administrators, Executors

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Transfers included in estate due to lack of consideration

Article Abstract:

The Tax Court decided in Estate of Magnin that a lack of consideration in a transfer between a father and son resulted in the total value of the interests transfered being considered part of the son's estate upon his death. The original transfer was made with the agreement that the son would will the assets to his three children. The court ruled that a lack of full consideration at the time of the orignal transfer resulted in the son holding a lifetime income interest in the property, which was therefore part of his estate.

Estate planning, Family-owned business enterprises, Family-owned businesses, Estates (Law), Business registration

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Reasonable certainty of death prevented use of actuarial tables for valuation

Article Abstract:

The Tax Court ruled in a memorandum opinion in Estate of McLendon that IRS actuarial tables cannot be used to value the remainder interest of a private annuity when the individual used as the measuring life is likely to die within one year. The taxpayer had used the IRS actuarial tables to determine life expectancy for gift tax valuation purposes instead of using actual life expectancy. IRS regulations state that the tables cannot be used if there is a 50% or more probability of death within one year.

Direct Life Insurance Carriers, Life insurance, Annuity Insurance, Insurance, Statistics, Gift tax, Annuities

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