Authored by John Walker and Chris D. Treharne, ASA, MCBA, BVAL of Gibraltar Business Appraisals, Inc. a member firm of FCG Issue 13:13
Estate of Clyde W. Turner, Sr., Deceased, W. Barclay Rushton, Executor, Petitioner, V. Commissioner of Internal Revenue, Respondent T.C. Memo. 2011-209, Docket No. 18911-08, Judge: Hon. L. Paige Marvel, August 30, 2011
The court ruled that assets contributed to a family limited partnership were includable in Decedent’s gross estate. Even so, premium payments on life insurance made by Decedent’s trust were gifts of present interests to the trust’s beneficiaries.
The Takeaway
Commingling funds, lack of significant non-tax reason for formation, continued use/enjoyment of assets, disproportionate and inappropriate distributions, and receipt of improper compensation caused the Taxpayer’s gift to be treated as retained interests.