Discount available when property was held partly outright and partly in QTIP trust

Article Abstract:

The US Court of Appeals for the Fifth Circuit ruled in Estate of Bonner that fractional interest discounts were still available for the decedent's estate despite the fact that the decedent controlled 100% of the interests in the property. The IRS argued that the interests owned outright and those held in a qualified terminable interest property trust should be merged and valued without any discount. The Court disagreed because it found the trust that the decedent held a 100% interest in was actually controlled by the spouse that had established the trust when she died.

Decedents' estates, Qualified terminable interest property, Qualified terminable interest property trusts

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Securities law restrictions that lapsed at death were ignored in valuing stock

Article Abstract:

The US Tax Court ruled in Estate of McClatchy that stock valued at a discount before death because of transferability restrictions should not be discounted for estate tax purposes because the restrictions ended at the moment of death. The stock was privately held and unregistered, so it could not be sold on the market. The estate argued that the value should reflect this restriction, but the Tax Court agreed with the IRS that it was appropriate for valuation to reflect the decedent's death.

Securities, Discount (Finance)

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IRS rules on tax effects of gift of stock option

Article Abstract:

IRS Letter Ruling 9616035 surveys the tax implications of gifting employee stock options to family members. The IRS will treat such transfers as taxable gifts, though income taxation will not occur until the options are exercised. The IRS is willing however to value the options for gift tax purposes at the time of transfer. While the IRS allows the options to be assigned, the tax liabilities will stay with the employee, creating a disjunction of economic benefits and burdens.

Taxation, Stock options, Gift tax

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