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Blogging from Heckerling – The Devil is in the Details

Jan 15, 2015

The 49th annual Heckerling Institute on Estate Planning convened in Orlando, Florida this past January. Heckerling is the largest and most prestigious estate planning conference in the country. This year's Institute drew more than 3,000 attendees.

Several EisnerAmper professionals attended the Institute and reported on "hot" topics being discussed. The following is a summary of some of the discussions:

A Primer on Basis of Property
Estate Planning Post ATRA
Planning with Portability
Digital Assets of a Decedent
Transferring Wealth to Younger Family Members
The Devil is in the Details

Continuing with our reports from the Heckerling Institute on Estate Planning, January 2015

 M. Reed Moore of McDermott Will & Emory LLP led a very informative discussion on the importance of “Adequate Disclosure” as it pertains to gift tax returns. Final regulations on this matter were issued on 12/3/1999.  Adequate disclosure is extremely important because if the IRS determines that the standards of the regulations have not been met, no statute of limitation applies.  The gift return is open for audit until corrected.  You can imagine the serious consequences if this incomplete gift tax return is found upon audit of the donor’s estate and significant tax is now owed by the estate or beneficiaries.

To assure adequate disclosure on a gift tax return, the transfer needs to be reported in a way that the IRS can determine the nature of the gift and basis for the value reported.  The speaker stated the following 5 elements are required to achieve adequate disclosure:

  1. A description of the transferred property and any consideration received by the recipient
  2. The name of and the relationship between the transformer and transferee
  3. Any property transferred in trust must also report the trust ID#, and either a description of the trust terms or a copy of the trust
  4.  A “Qualified Appraisal” if required under the Treasury Regulations or, if not required, a detailed description of the method used to determine FMV.
  5. A statement describing any position taken on the gift returns that is contrary to any proposed, temporary or final regulations published at time of gift.

Corrective measures should be taken as soon as a possible lack of adequate disclosure is discovered.  If it is determined that an amended return is required, it is again very important to know that the IRS has specific regulations on the information that must be provided.  You need to be sure these requirements are met or all your good efforts won’t fix anything. As we have always been told – “do it right the first time.”

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Barbara Taibi

Barbara Taibi is a Partner in the Private Client Services Group with years of public accounting and income tax planning and tax return preparation experience. Barbara focuses on helping clients plan for and meet their financial and tax goals.

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