FCG Valuation Case E-flash Petitioner v. Commissioner of Internal Revenue

Authored by Chris D. Treharne, ASA, MCBA, BVAL and Fawntel Romero of Gibraltar Business Appraisals, Inc., a member firm of FCG Issue 12:1

CITATION:
WALTER M. PRICE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent, and SANDRA K. PRICE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent, T.C. Memo 2010-2, Docket Nos. 9611-06, 9642-06. Filed January 4, 2010.

The Tax Court ruled whether gifts of limited partnership interests were properly characterized as present interests, thus qualifying for annual gift tax exclusions (not lifetime gift tax exclusions).

Comments
In Hackl v. Commissioner, 118 T.C. 279, 294 (2002), the court found that transfers of LLC interests were gifts of future interest and the court ruled that the gifts did not qualify for the annual gift tax exclusion. According to Hackl, to prove gifts are present interests, it must be shown that: (1) The LLC would generate income at or near the time of the gifts, (2) Some portion of that income would flow steadily to the donees, and (3) The portion of income flowing to the donees can be readily ascertained.

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