THE PREVIEWS:
2015 SUPPLEMENT S-PRE-1
Table of Contents
PRE-11
Author’s Introduction
CH.4 An Inconvenient Truth About
the Set Design for Estate Tax
Returns
S-PRE-13 Author’s Introduction
PRE-15
Foreword by John T. Schooler, Esq.
PRE-21
Notices
4.1
Setting Up Camp
S-PRE-15 Notices
4.2
The Benefits of a Fat Estate Tax Return
PRE-22
4.3
Estimated Audit Percentages
4.3.1
Snapshots: Audit Percentages from 1992,
2007, and 2012
4.3.2
A Closer Look at the Audit Percentages
4.3.3
IRS Staffing and Structural Changes
4.3.4
Future Audit Percentages
4.4
Processing Estate Tax Returns
4.5
Presenting the Estate Tax Return
4.5A
Making the DSUEA Election on Form 706
4.6
Who Took the Strawberries?
4.7
Those Darn Questions
4.8
Conclusion
The Exposition
The Overture
Mission Statement
CH.1 The Estate Tax Return:
The Final Exam
1.1
Prelude
S-1.1
Prelude
1.2
S-1.2
The Under-Prepared Return Preparer
The Under-Prepared Return
Preparer
1.3
The Mission Possible of Art of the Estate
Tax Return
1.4
Most Tax-Paying Estates Overpay Estate
Tax
1.5
Preview of the Portability Election
CH.2 Buy Time … It Can Even Be Free
CH.5 The Executive Producer
5.1
Don’t File in a Fog
5.2
Location for Filing
5.3
Which Estates Must File?
5.4
Timely Filing and Extension of Time for
Filing
2.1
Buy Time … For Free
2.2
When Counterintuitive Thinking May Pay
Off
5.5
Extending the Time to File and Pay
5.6
2.3
Late Filing Penalties Can Be Horrid
Prior Transfer Credit Benefits Help Get
Alice Home
S-5.6
Late Filing Penalties Can Be Horrid
2.4
Creating the Prior Transfer Tax Credit
5.7
This Watch Is Two Days Slow
2.5
Extend the Time When Life Estates or
Potential QTIP Trusts Exist
S-5.8
Paying Estate Tax Timely
5.8
Paying Estate Tax Timely
2.6
Distribution and Timing
5.9
When the IRS Does Not Respond
2.7
Conclusion
5.10
Conclusion
CH.3 Some Like it Hot and
Saving a Fortune
3.1
The Gift of Frederick Mellinger and His
Wonderful CPA
3.2
Lifetime Estate Planning
3.3
Trust Funding
3.4
Conclusion
CH.6 Adjusted Taxable Gifts:
Costume Design
6.1
A Trojan Horse or Ruby Slippers?
6.2
Adjusted Taxable Gifts
6.2.1 Adjusted Taxable Gifts After the 2010
Tax Act
6.2.2
Summary of the Significant Changes
Made “Permanent”
S-PRE-2 2015 SUPPLEMENT
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
6.2.3
Gift Tax Exemption Use With Reduced
Gift Tax Rate
6.7.11
6.2.4
Computation of the Gift Tax on the Gift
Tax Return
6.7.11.1 Income Tax Recognition by Donor If Gift
Tax Exceeds Donor’s Basis
6.2.5
Pre-2002 Taxable Gifts May Create a
Phantom Portability Amount
6.7.11.2 Net Gifts and the Three-Year Rule
6.2.6
Gift Splitting
6.3
Taxable Gifts and Their Calculation
6.4
Did the Decedent File Gift Tax Returns?
6.5
Did the Decedent Make Gifts That Were
Not Reported on a Gift Tax Return?
6.5.1
Is It a Loan or a Gift?
6.5.2
Unreported Gifts of Real Estate
6.5.3
Do Retained Powers of Appointment
Render a Transfer Incomplete?
6.6
Action Steps When Prior Gifts Are
Discovered
Net Gifts
S-6.7.11 Net Gifts
6.7.11.3 Net Gifts and the Line 7 Credit
6.8
Grantor Retained Annuity Trusts
S-6.8
Grantor Retained Annuity Trusts
6.8.1
Summary of GRAT Features
6.8.2
GRAT Requirements
6.8.3
Zeroed-Out GRAT
6.8.4
Term of the GRAT
6.8.5
Enhanced GRAT Results with Gifts of
Entity Interests
6.8.6
Payment of Income Tax by the Grantor
6.8.7
Pre-Death IDGT Buy-Back
S-6.6
Action Steps When Prior Gifts Are
Discovered
S-6.8.7
Pre-Death IDGT Buy-Back
6.8.8
IDGTS Best Long-Term GRATs
6.7
Raiders of the Lost Ark in Gift Tax Law
6.9
Adequate Disclosure and Sales
S-6.7
Raiders of the Lost Ark in Gift Tax
Law
6.10
Sales or Gifts to Intentionally Defective
Grantor Trusts
6.7.1 Favorable Adjustments to Line 4 of Form
706
S-6.10
Sales or Gifts to Intentionally
Defective Grantor Trusts
6.7.2 Make Timely Delivery of Year-End Gifts
6.11
Self-Canceling Installment Notes
6.7.3 Watch Out for Present-Interest Challenges
to Gifts of Entity Interests
6.12
Conclusion
6.7.4 Caution With Rescission or Reformation
of Gifts
CH.7 Concluding Audits and
Appeal Rights
S-6.7.4 Caution With Rescission or
Reformation of Gifts
The Agent – Be Nice, Ari
6.7.5
7.1
The Loyal Opposition
7.2
Practical Audit Tips and Setting Up the
Best Result on Appeal or Trial
S-7.2
Practical Audit Tips and Setting Up
the Best Result on Appeal or Trial
7.3
Appeals Is an Independent Branch From
Audit
Formula Clauses Receiving More
Favorable Treatment, Though Challenges
Remain
S-6.7.5 Formula Clauses Receiving More
Favorable Treatment,
Though Challenges Remain
6.7.6 Cross Beneficiaries of Annual Exclusion
6.7.7 Indirect Gifts by Entities
7.4
S-6.7.7 Indirect Gifts by Entities
Alternate Dispute Resolution
7.5
6.7.8 Protective Refund Claim on State Taxes
Gift Taxes on Gifts Paid Within Three
Years of Death
7.6
Refunds and Refund Claim Proceedings
6.7.9 Transfers Must Be Effective to Be
Respected
S-7.6
Refunds and Refund Claim
Proceedings
6.7.10
Qualified Disclaimers
7.7
Conclusion: Playing Fair
THE PREVIEWS:
2015 SUPPLEMENT S-PRE-3
Main Street
CH.7A Portability Elections: A New
Era in Estate Planning and
Compliance
7A.1
Jackie Robinson and Portability Elections:
The New World of Estate Planning and
Compliance
7A.2
Identifying the Black Swan … but From
What Angle?
7A.3
Strategic Planning Considerations With
Portability Elections
S-7A.3
Strategic Planning Considerations
With Portability Elections
7A.3.1 Trusts Remain Relevant for Tax and NonTax Purposes
7A.3.2
Can the Estate Plan Create a Gray Swan?
7A3.3
Portability Elections as a Form of Estate
Tax Insurance
7A.3.4
To QTIP or Not QTIP, That Is the
Question
7A.3.5
No Inflation Adjustment on the DSUEA
7A.3.6
Significance of State Taxation
S-7A.3.7
Protecting the Marital Deduction
. . . Distributions to a Survivor’s
Trust Are Not the Same as
Distributions Directly to the
Surviving Spouse
[New Topic]
S-7A.8
Regulations Governing Portability
Elections on the Estate Tax Return of
the Deceased Spouse
7A.8.1
Significant Terminology
7A.8.2
Determining Who Controls the Portability
Election
7A.8.3
Computation of the DSUEA
7A.8.3.1 Computing the DSUEA When the
Surviving Spouse is the Beneficiary of a
QDOT
7A.8.4 Making the Portability Election
7A.8.4.1 Drilling Down on the Timely Return
Requirement for Portability Elections
7A.8.4.2 Requirement for a Complete and
Properly Prepared Return
7A.8.4.3 Defining the Spouse
7A.8.4.4 Temporary Relief to File Late Portability
Election under Rev. Proc. 2014-18
S-7A.8.4.4 Temporary Relief to File Late
Portability Election
Under Rev. Proc. 2014-18
7A.8.4.5 Temporary Relief to Refund Claim As a
Result of Windsor
7A.8.4.6 Pre-2002 Gifts and Impact on the DSUEA
S-7A.8.4.6 Pre-2002 Gifts and Impact on the
DSUEA
7A.9
Simplified Requirements to Report Values
S-7A.9
S-7A.3.7.1 Background Considerations
[New Topic]
Simplified Requirements to Report
Values
7A.10
S-7A.3.7.2 A Trust Established by the
Surviving Spouse Is Not the Same
as Outright Distribution to the
Surviving Spouse [New Topic]
The Problem of Establishing Income
Tax Basis With Portability Elections and
Simplified Reporting in Particular
7A.10.1 The Fundamentals
S-7A.3.7.3 Transient Limitations Defeat
Most of a Lifetime of Virtual
Omnipotence [New Topic]
7A.4
Fiduciaries Beware
7A.5 Marital Deduction Trusts and Portability
Elections
7A.6
QTIPing a Credit Shelter Trust
7A.7
General Power of Appointment Trust
7A.8
Regulations Governing Portability
Elections on the Estate Tax Return of the
Deceased Spouse
7A.10.2 The Estate Tax Return Must Be Required
7A.10.3 Evidencing Fair Market Value: Standard
vs. Simplified Reporting
7A.10.4 Narrowing Practical Benefit of Simplified
Reporting
7A.11
Limitations for Simplified Reporting
When State Death Tax Returns Need
Federal Return Information
S-7A.11 Limitations for Simplified Reporting
When State Death Tax Returns Need
Federal Return Information
S-PRE-4 2015 SUPPLEMENT
7A.12
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
8.4
Highest and Best Use
8.5
Completing Schedule A
8.6
Post-Death Facts: When Do They Count?
S-8.6
Post-Death Facts: When Do They
Count?
8.7
What Kind of Appraiser Do You Need?
7A.12.2 How Can a Refund Claim Function When
No Tax Is Payable to Refund?
8.8
Hiring and Communicating With the
Appraiser
7A.12.3 The IRS, Not the Taxpayer, Can Adjust
the DSUEA by Statute
8.9
Overview of Fractional Interest Discounts
8.10
Fractional Interest Discount Cases
7A.12.4 To What Court, if Any, Can the Deceased
Spouse’s Estate Seek Recourse to
Determine an Increase in the Portability
Amount?
8.11
Bogus Argument: FID Is Limited to the
Cost of Partition or Aloha
8.12
Does the Size of the Fractional Interest
Owned Determine Discount?
8.13
Fractional Interest Disclosure: Who to
Hire and How to Prove the Case
8.14
No Fractional Interest Discount With
Joint Tenancy Property
8.15
Role of the Valuation Engineer and the
Taxpayer’s Rights
8.16
Strike it Rich: Recourse and
Non‑Recourse Debt and the FID
8.17
The Impact of Debt on the Total Value
Being Taxed
8.18
Potential for Negative Return Value
What Would Natalie’s Character Say?
8.19
Audit Defense Point
APPENDIX I: Comparison of Exemption
Trust and QTIP Trust (3% Growth)
8.20
Discounts on the Death of the First
Spouse
APPENDIX 2: Comparison of Exemption
Trust and QTIP Trust (6% Growth)
S-8.20
Discounts on the Death of the First
Spouse
APPENDIX 3: Sample Prior Gifts
Calculation
8.21
Bulk and Blockage Discounts
8.22
Toxics, Hazardous Waste Code
Compliance, and Drawbacks to Value
8.23
Alternate Valuation Date Election
S-8.23
Alternate Valuation Date Election
8.23.1
Interest
8.23.2
Rent
8.23.3
Dividends
8.23.4
Anti-Kohler Regulations
8.24
Portability and Real Estate Valuation
8.25
Conclusion
Reporting Portability Elections When
Unknown Liabilities, Claims, and
Deductions Exist at the Time of Filing
That Are Not Currently Deductible on the
Federal Estate Tax Return
7A.12.1 Limitations on Schedule J and K
Deductions: Generally Payment Required
7A.12.5 Deduct Allowable Expenses and Claims
on the Portability Electing Return to the
Extent Allowable
7A.12.6 Building Flexibility With Finality of the
DSUEA
7A.13
Extended Audit Period to Challenge
Portability Election
7A.14
Regulations for Portability Applicable to
the Surviving Spouse’s Estate
7A.14.1 Special Rule When Surviving Spouse
Receives DSUEA From a Decedent Who
Established a QDOT
7A.15
APPENDIX 4: Sample Page 4, Part D to
Form 706: DSUEA From Predeceased
Spouse
The Cast of Characters:
The Schedules
CH.8 Schedule A: Real Estate
Tara
8.1
Real Estate: It’s Called “Real” for a
Reason
8.2
First Focus on Underlying Value
S-8.2
First Focus on Underlying Value
8.3
Inform the Appraiser About the Facts of
the Property
APPENDIX I: Sample Brief Attachment
for Fractional Interest Discount
APPENDIX 2: Additional Discussion to
Section 8.11: Bogus Argument: FID is
Limited to the Cost of Partition or Aloha
THE PREVIEWS:
CH.9 Schedule A-1: Special-Use
Valuation Elections
2015 SUPPLEMENT S-PRE-5
10.4
Valuation of the Closely Held
Corporation: The Entity-Level Appraisal
S-10.4
Valuation of the Closely Held
Corporation: The Entity-Level
Appraisal
10.5
Taxpayers Are Prevailing on the
Deduction for Built-in Gain
(“BIG Discount”)
Tax Characteristics and S Corporations
How Green Is Your Valley?
9.1
Keeping the Family Farm
9.2
Purpose of the Special-Use Election
S-9.2
Purpose of the Special-Use Election
9.3
Special-Use Qualifications
10.5A
9.4
Making the Code §2032A Election
9.4.1 Timing and Content
S-10.5A Tax Characteristics and
S Corporations
9.4.2 Relief to Make Late Special-Use Elections
10.6
9.4.3 Protective Code §2032A Elections
No Built-In Gain Deduction With FLPs,
IRAs, or General IRD Items
9.4.4 Partial Code §2032A Elections
10.7
9.4.5 The Practical IRS Approach to Audits of
Code §2032A Elections
Discounts and Premiums Relating to the
Value of Closely Held Stock
10.8
Survey of Minority Interest Discounts
9.5
Providing Evidence of Farm Rent
Comparables
10.9
Lack of Marketability Discount
S-10.9
Lack of Marketability Discount
10.10
No “Safe Harbors”
10.11
Community Property and the Minority
Interest Discount
10.12
Control Premiums
10.13
Restrictive Agreements and Covenants
9.6
9.7
Discounts and Their Relation to SpecialUse Valuation
Special-Use Elections and AV Date
Elections
S-9.7
Special-Use Elections and AV Date
Elections
9.8
Material Participation Test: Pre-Death and
Post-Death Planning Traps
9.9
Recapture or Cessation of Special Use
S-9.9A
Special-Use Elections and GST Tax
[New Topic]
9.10
Income Tax Basis Adjustment Election in
the Event of Additional Tax
9.11
Problems Created by the Reduced Basis
With Special-Use Elections
9.12
IRS Lien on the Recapture Tax
9.13
Special-Use Valuation and Portability
Elections
9.14
Planning Considerations and Summary
APPENDIX I: Questions and Responses
of Dean Bretney, Esq.
CH.10 Schedule B: Stocks and Bonds
“Greed is Good” and Billy Madison
10.1
Setting the Stakes
10.2
Valuation of Publicly Traded Stocks and
Bonds
10.3
Fair Market Value
S-10.3
Fair Market Value
10.13A Valuation of Options, Puts, and Call
Rights
10.14
The Added Burden of Code §2703
10.15
Broad Application of Code §2703
10.16
Appraisal Assistance on Comparability
Test
10.17
Marital Deduction Warning
10.18
Warning About Inconsistency With the
Business/Economic Deal
10.19
Blockage Discounts
10.20
Warning: Avoid Adding Closely Held
Stock to FLPs/LLCs
10.21
Portability Elections and Schedule B
10.22
Conclusion
CH.11 Schedule C: Cash and
Promissory Notes
Money Makes the World Go Around
11.1
Opening the Account
11.2
Reporting Account Balances
11.3
Valuation of Promissory Notes
11.4
Apparent Disconnect Between Gift Tax
and Estate Tax Value
S-PRE-6 2015 SUPPLEMENT
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
11.5
Valuation of Promissory Note
Bequeathed to the Maker
S-14.2
Valuation of Limited Partnerships
and LLCs: The Entity Wars
11.6
Portability and Schedule C Reporting
14.3
11.7
Valuation Is a Cabaret
The Tax Benefits of Entities (or
something like that)
14.4
The Starting Point: Code §2036
S-14.4
The Starting Point: Code §2036
14.5
Overview and History of the IRS’s
Challenges to Entities
14.6
29 Action Steps to Defeat IRS Attacks
Against Entities
S-14.6
29 Action Steps to Defeat IRS Attacks
Against Entities
14.7
Code §2036(a)(1): Disregarding the Entity
14.8
Determine the Nature of the Interest
Being Valued
14.9
Significance of State Law
14.10
Code §2704 and Lapsing Rights
14.11
Code §2701 and Distribution Preferences
CH.12 Schedule D: Life Insurance
Where Hartford is Capital
12.1
Woody Allen, Mr. Smith, Robert De Niro,
and Life Insurance
12.2
Reporting Life Insurance and Form 712
12.3
Avoiding Incidents of Ownership
12.4
Issues With a Non-Citizen Spouse
12.5
Cross-Trust Doctrine
12.6
Life Insurance and the Credit Shelter
Trust: Be Cautious
12.7
Life Insurance Payable to a Corporation
or Partnership Controlled by the Insured
12.8
GST Warning
12.9
Under-Purchased Asset
12.10
Life Insurance and the Net Investment
Income Tax
12.11
Life Insurance and Portability Elections
12.12
Conclusion
S-14.11 Code §2701 and Distribution
Preferences
14.12
Discovery Issues and Experts
14.13
Sampling of Entity Valuation Discount
Cases
14.14
Amount of Estate Tax Inclusion and
Application of Code §2043
CH.13 Schedule E: Joint Tenancies
Ralphie’s Gun
14.15
Tiered Discounts
14.16
Protect Mellinger Discounts When
Surviving Spouse Dies
13.1
The Strange World of Joint Tenancies
14.17
The Danger Zone: Unfunded Trusts
13.2
What to Report on Schedule E
S-14.17 The Danger Zone: Unfunded Trusts
13.3
Qualified and Non-Qualified Interests
14.17.1 Contingent Fee Claims
13.3A
Windsor and Qualified Joint Tenancies
13.4
State Law Characteristics of Joint
Tenancies
14.17.2 Malpractice Claims or Cause of Action of
Estate
13.5
Tracing Contributions of the Surviving
Joint Tenant
14.17.4 Mineral, Oil, and Gas Rights
13.6
Disclaimer of Joint Tenancies
14.17.6 Contingent and Disputed Claims
13.7
Reporting Joint Tenancies With
Portability Elections
14.17.7 Beauty is in the Eye of the Beholder —
Valuation of Art
13.8
Conclusion
14.17.7.1Passion, the World of Art, and Maybe
More
S-12.12 Conclusion
CH.14 Schedule F:
14.17.3 Wrongful Death Recoveries
14.17.5 Copyrights and Patents
Hardly Miscellaneous
S-14.17.7.1 Passion, the World of Art, and
Maybe More
14.1
Action Central With a Sedating Title
S-14.17.8
14.2
Valuation of Limited Partnerships and
LLCs: The Entity Wars
14.18
Unlawful Assets [New Topic]
Hidden Assets
THE PREVIEWS:
14.19
Portability Elections and Schedule F
14.20
Summary
APPENDIX 1: Discussion of Significant
Code §2036 and Indirect Gift Cases
CH.15 Schedule G:
Transfers During Life
2015 SUPPLEMENT S-PRE-7
S-16.3
The Release or Exercise of a
General Power of Appointment
16.4
Reprise the Trojan Horse … Crummey
Powers and Crummey Trusts
16.5
Crummey Complexities
16.6
Income Tax Effects on the Power Holder
16.7
Gift Tax Effects on the Power Holder
15.1
Boomerang Gifts and Strings
16.8
Estate Tax Effects on the Power Holder
15.2
Narrowed ‘Gift in Contemplation of
Death’ Rule (Modified Three-Year Rule)
16.9
GST Tax Considerations
15.3
Invalid Withdrawal From Trust Under
Durable Power of Attorney
16.10
General Powers of Appointment and
Portability
S-15.3
Voidable Gifts and Withdrawals
Under Durable Power of Attorney
[Amended Heading]
16.11
Troy Did Not Fall
APPENDIX I: 5/5 Limitation Illustration
APPENDIX 2: Demand and Withdrawal
Right Time Requirement Chart by Rod
Goodwin, MST
15.4
Uniform Transfers to Minors
15.5
Sale of Remainder Interest Marital Trusts
15.5A
Sale of Remainder Interest of a QTIP
Trust
15.5B
Gifts from the Sale or Disposition of
Interests in QTIP Trusts
15.5C
Gap in the Regulations Needs Closing
QTIP Trust Arising With Simplified
Reporting
17.1
Gee, Isn’t Pleasantville Swell?
17.2
Overview of Schedule I
15.6
Gross-Up for Gift Tax on Gifts Made
Within 3 Years of Death
17.2.1
General Requirements for Annuities
17.2.2
Annuities Under Approved Plans
15.7
Reduction of Adjusted Taxable Gifts
When Included in the Gross Estate
17.3
Private Annuities
17.4
Employee Death Benefits
15.8
One Step Is Better Than Two
17.4.1
15.9
Valuation of GRATs
15.10
Retained Agreement for Use or
Enjoyment
Estate Tax Inclusion When the Decedent
Received No Benefit and Had No Right
to Receive Benefits
17.5
15.11
Intentionally Defective Grantor Trusts
IRAs, Qualified Retirement Benefits, and
Community Property
15.12
Self-Settled Asset Protection Trusts
17.6
Lottery Winnings
15.13
Answering the Ambiguous Question 13e
on Page 3 of Form 706
17.7
Benefits for Those Who Wait
15.14
Schedule G Should Be Rated “B” —
Beware!
CH.16 Schedule H: Powers of
Appointment
I Don’t Own It, But It’s Mine
16.1
The Tax Preference for the Ages
16.2
Defining General Power of Appointment
16.3
The Release or Exercise of a General
Power of Appointment
CH.17 Schedule I: Annuities
The Action is in the
Pre-Death Planning
APPENDIX 1: Questions and Answers
from Michael Jones, CPA
CH.18 Schedule J: Funeral and
Administrative Expenses
18.1
Prelude to the Deduction Battle
18.2
Funeral Expenses
18.3
Administrative Expenses
18.3.1
Actual and Necessary Requirement:
Majority and the 7th Circuit
18.3.2
Requirements Under the 2009
Regulations
S-PRE-8 2015 SUPPLEMENT
18.3.3
Legal and Accountant Fees
18.3.4
Operation of a Business
18.3.5
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
19.5.2
Claims Based on Relinquished Marital
Rights
Deduction for Expenses of Sale
19.5.3
Palimony
18.3.6
Deduction for Interest
19.5.4
Foreign Death Taxes
18.3.7
Deduction for Repair and Maintenance
Expenses
19.5.5
Guarantees
19.5.6
Income Tax and Gift Tax Liability
18.3.8
Deduction for Statutory Interest on
Delayed Distribution
19.5.7
Estate Tax Penalties
19.5.8
State Death Tax Deduction
18.4
“Swing-Item” Deductions
19.5.9
Care-Giving Services
18.5
Rev. Proc. 2011-48 In-Depth
19.5.10 Family-Related Loans
18.6
Portability Elections and Schedule J
Deductions
19.5.11 Malfeasance by the Decedent as a
Fiduciary
S-18.6
Portability Elections and Schedule J
Deductions
19.5.12 No Deduction for Income Taxes Paid
From an IRA Account
18.7
Mortality and the Code §2053 Regulations
19.5.13 Deduction for Unpaid Mortgages
CH.19 Schedule K:
Debts of the Decedent
19.1
Unplug the Power Cord
19.2
October 2009 Final Regulations and
Notice 2009-84
S-19.2
October 2009 Final Regulations and
Notice 2009-84
19.2.1
Claims and Expenses Must Be Bona Fide
19.2.2
Court Decrees and Settlements
19.2.3
The Amount Deductible
19.2.4
Application of Post-Death Facts
S-19.5.14
Review Electronic Records
[New Topic]
19.6
Schedule K and Portabilty Elections
19.7
Plugged In and Turned On
CH.20 Schedule L: Losses and
Deductions Not Subject
To Claims
20.1
Schedule of Lonely Deductions
20.2
Losses
20.3
Expenses Incurred for Administration of
Property Not Subject to Claims
S-19.2.4 Application of Post-Death Facts
20.4
Schedule L Deductions and Portability
19.2.5
Refund Claims
20.5
19.2.6
Mortgages and Deeds of Trust
Conclusion: L is for Lonely — Leave it
Alone
19.2.7
Cross-Claims and Liabilities With Respect
to Particular Assets
19.2.8
Contingent and Non-Contingent
Obligations
19.2.9
Relief for Claims and Expenses Totaling
$500,000 or Less
19.2.10 Deduction for Taxes
CH.21 Schedule M: Marital Deduction
Marriage: The Great Estate Tax Deal
21.1
Marriage Sires the Best Deduction
S-21.1
Marriage Sires the Best Deduction
21.2
The Essentials of Marital Deductions
21.3
Basic Requirements
S-21.3
Basic Requirements
19.3
Are the 2009 Regulations Legal When
They Conflict With Circuit Court Law?
19.3.1
Disclosures on Estate Tax Returns
21.4
Survivorship
19.4
Deductions of the First & Second
Category
S-21.4
Survivorship
21.5
Terminable Interest Rule
19.5
Review of Various Deductions and
Claims
S-21.5
Terminable Interest Rule
19.5.1
21.6
Unproductive Property
Checks Outstanding as of the Date of
Death
21.7
Specific Portion Requirement
THE PREVIEWS:
21.8
Tax Payment Allocated to the Marital
Deduction Gift
21.9
Marital Deduction Trusts
21.9.1
Estate Trusts
21.9.2
General Power of Appointment Trusts
21.10
QTIP Trusts
21.11
The All Net Income Requirement
21.11.1 Stub Income: Accrued but Unpaid
Income At Death
21.11.2 Equitable Recoupment
21.12
No Benficiaries Other Than the Survivng
Spouse
21.13
Irrecovable Election
21.13.1 Elections
21.13.2 Relief From Erroneous Elections or
Omissions of a QTIP Election
21.14
Marital Deduction With Charitable
Remainder
21.15
Post-Death Administration Expenses
S-21.15 Post-Death Administration Expenses
2015 SUPPLEMENT S-PRE-9
22.4
Amount of the Charitable Deduction
22.4.1
Limitations on Deductions of Partial or
Split Interests
22.4.2
Death Taxes and Expenses Paid Out of
the Charitable Transfer
22.5
Reformation Proceedings and Corrective
Steps
S-22.5
Reformation Proceedings and
Corrective Steps
22.6
Gifts of Partnership Interests to
Charitable Trusts or Family Foundations
22.7
Disclaimers for the Benefit of Charity
22.8
What’s Up With Charitable Giving … or
Non-Giving?
22.9
Business-Related Charitable Planning
22.9
S-Business-Related Charitable
Planning
22.10
Portability Elections and the Charitable
Deduction
22.11
Pay It Forward
21.16
Marital Deduction and IRAs Distributable
to a QTIP Trust
CH.23 Schedule P:
21.17
Community Property Rights of the
Non‑Participant Spouse
Traveling Men (and Women)
21.18
Non-Pro Rata Division of Community
Property
23.1
IRS Seeks Out the Beautiful World
23.2
Situs of the Property
21.19
Allocating Assets to Marital Deduction:
Relationship to Value in Gross Estate
23.3
Limitations on the Credit
23.3.1
21.20
Qualified Domestic Trusts (Code §2056A)
Marital Deduction and Charitable
Deduction Limitations
S-21.20
Qualified Domestic Trusts
(Code §2056A)
23.4
Valuation of the Property and Credit
23.5
21.21
Valuation of the Credit
The Rev. Proc. 64-19 Reminder
23.6
21.22
Credit Under Treaties
Transactions Between the Marital Trust
and Third Parties, and Other Limitations
23.7
Proof of the Credit
21.23
Marital Deduction Through a Disclaimer
23.8
Period of Limitation
21.24
Settlement of Estate or Trust Disputes
and the Marital Deduction
23.9
Deduction Under Code §2053(d)
23.10
Tax Planning in the Beautiful World
21.25
Portability and the Marital Deduction
21.26
What’s in a Yawn?
CH.22 Schedule O:
Charitable Deductions
The Kindness of Strangers
22.1
When Charity Does Not Begin At Home
22.2
Availability of the Charitable Deduction
22.3
Documentation and Verification
Foreign Death Tax Credit
CH.24 Schedule Q:
Prior Transfer Credit
Groundhog Day
24.1
Reliving the Past
24.2
Valuation of Property Transferred
24.3
Defining Property
24.4
Defining Transfer
24.5
Limitations on the Credit
S-PRE-10 2015 SUPPLEMENT
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
24.6
The Estate Tax Must Be Paid
25.8.2
Lifetime GST Exemption
24.7
Additional Tax Arising With Respect to
Special-Use Property and the PTC
25.8.3
The GST Exemption Allocation:
Applicable Fraction and Inclusion Ratio
24.8
Getting It Right
25.8.4
Lifetime Transfers
CH.25 Schedule R: GST Tax
Rube Goldberg and Transfer Tax Law
25.8.4.1 Pre-January 1, 2001 Rules
25.8.4.2 Post-December 31, 2000 Rules
25.8.5
Timely Allocations of GST Exemption
and Valuation
25.8.6
Late Allocations
25.8.7
Use of Exemption Increase for Late
Allocations
S-25.1A GST Tax Law in 2010—Moonlight
Serenade
25.8.8
Allocation of GST Exemption Under
Relief Provisions
25.2
Thirteen Summary Points
25.8.9
GST Exemption Allocation on Death
25.3
Chronological Exemptions
25.8.10 ETIP Exception
25.4
Additions to a Chronologically Exempt
Trust
25.8.11 Excessive Exemption Allocations
25.4.1
Actual Additions
25.8.12 Relief Provisions for Late Allocation of
GST Exemption
25.4.2
Constructive Additions
S-25.8.12
25.4.3
Constructive Additions and Limited
Powers of Appointment
25.8.13 Relief at a Discount
25.5
Avoid Substantial Modifications
25.9
Identity of the Transferor
S-25.5
Avoid Substantial Modifications
S-25.9
Identity of the Transferor
25.6
GST Taxable Events
25.9.1
Reverse QTIP Elections
25.6.1
Skip Persons and Non-Skip Persons
S-25.9.1 Reverse QTIP Elections
25.6.2
Predeceased Ancestor Exception (Code
§2651(e))
25.9.2
Gift Splitting
25.6.3
25.9.3
The Move-Down Rule
Interests Through Entities
25.6.4
25.9.4
Lapsing Crummey Powers
GST Trusts (The ‘Cure’: But Do They
Help?)
25.10
Completing Schedule R
25.6.5
Direct Skips
25.6.6
Multiple Skips
25.6.7
Taxable Distribution
25.6.8
Taxable Terminations
25.6.9
Trusts
25.7
Separate Share Rule
25.7.1
Separate Share Relief: Qualified
Severance Under Code §2642(1)(3)
25.7.2
Pecuniary Trusts and Bequests
25.7.3
Multiple Transferors With Respect to a
Single Trust
25.8
GST Exclusions and Exemptions
S-25.8
GST Exclusions and Exemptions
25.8.1
Annual Exclusion Gifts Under the Gift
Tax System: See the Traps
25.1
25.1A
Over-Burdensome Laws Suffocate a
Simple Principle
GST Tax Law in 2010 — Moonlight
Serenade
Relief Provisions for Late
Allocation of GST Exemption
S-25.10 Completing Schedule R
25.11
GST Exemption and Portability Elections
25.12
Allocation of GST Tax
CH.26 Schedule U: Qualified
Conservation Easements
Conservation Easements Without
a Conservation Purpose; or Alice
in Deduction and Exclusion Land
26.1
Once Upon a Time
26.2
The Potential Benefits
26.3
Summary of the Qualified Conservation
Easement Exclusion Under Code §2031(c)
26.3.1
The Definition of Land Subject to a QCE
26.3.2
The Definition of QCE
THE PREVIEWS:
2015 SUPPLEMENT S-PRE-11
26.3.3
Limitations on the Amount of the
Exclusion
27.10
Summary of Terminations of Code §6166
Elections
26.3.4
Reduction for Acquisition Debt
27.11
26.3.5 Reduction for Retained Development
Rights
Tax Court Review of Code §6166 Election
Denials
27.12
Code §6166 and Standing Before District
Court or Court of Claims
27.13
Extension of Time to Pay Estate Tax on
Remainder and Reversion Interests Under
Code §6163
26.4
Charitable Contribution
26.5
Indirect Ownership of Real Property and
QCE
26.6
Valuation
26.7
Restricted for Conservation Purpose
26.8
Practical Assistance From Qualification
for Land Trusts
26.9
27.13.1 Making the Election
27.13.2 Amount of Tax Deferrable
27.14
Discharge From Liability
Income Tax Basis Downside
27.15
Presto! Closing Letters
26.10
The Relationship of QCEs to Special-Use
Valuation
27.16
Ringing of the Bell
26.11
Summary
CH.27 Paying the Piper:
It’s Got to Happen
27.1
If Not Never, Then Pay Later (Legally)
27.2
Overview of Code §6166 Elections
S-27.2
Overview of Code §6166 Elections
27.2.1
Reprise of Recourse vs. Non-Recourse
Debt
27.2.2
Interest Rate on Deferral and Term
27.2.3
Protective Elections
S-27.2.3 Protective Elections
APPENDIX I: Sample Attachment to
Support IRC §6166 Election
Chapters 28-37: Chapters 28–37 include
estate tax returns for decedents dying in
years 2009–2012. To receive those chapters
electronically, as well as electronic newsletters
and news flashes, subscribe to the author’s
Update Service by visiting:
www.EstatePlanningAtTheMovies.com
The author’s subscription Update Service serves
as a complement to this Second Edition of Art
of the Estate Tax Return—Estate Planning at
the Movies®, and to any supplements to this
Second Edition offered by Bloomberg BNA.
27.2.4
Initial Review and Response From the
IRS
27.3
The Three-Year Rule and Code §6166
Qualification
27.4
The Decedent Must Own an Interest in a
Closely Held Business
27.5
Rental Real Estate and the Conduct of
Business
CH.38 Sample Estate Tax Return for
27.6
Acceleration of Estate Tax Liability From
Sales, Dispositions, Distributions, and
Withdrawals
CH.39 Sample Estate Tax Return for
The Dénouement
Death of First Spouse in 2013
the Death of an Unmarried
Individual in 2013
S-27.6
Acceleration of Estate Tax
Liability From Sales, Dispositions,
Distributions, and Withdrawals
27.7
Interest Deduction as an Additional
Administrative Expense
27.8
Discharging the Executor From Estate
Tax Liability Under Code §6166
40.1
Potential for Avoiding the Obligation to
Post Bond or Security
Death of the First Spouse in 2013
(DSUEA)
40.2
Electing Out of the DSUEA in 2013
27.9
CH.40 Sample Estate Tax Return for
an Estate Making a DSUEA
Election
S-PRE-12 2015 SUPPLEMENT
ESTATE PLANNING AT THE MOVIES® — ART OF THE ESTATE TAX RETURN
40.3
Considerations With the DSUEA
S-43.3
40.4
Background Facts to the Illustrated Estate
Tax Return
Considerations With the DSUEA
in 2014
S-43.4
Background Facts to the 2014
Illustrated Estate Tax Return
40.4.1
The Simplified Method of Reporting
Value
40.4.2
Comparing Valuation Methods
40.4.3
Is Simplified Reporting Desireable Even
If Available?
40.5
General Form of the Return
CH.41 Sample Estate Tax Return for
S-43.4.1 The Simplified Method of Reporting
Value
S-43.4.2 Comparing Valuation Methods
S-43.4.3 Is Simplified Reporting Desirable
Even if Available?
S-43.5
Death of First Spouse in 2014
[New Chapter]
S-41.1
Death of the First Spouse in 2014
CH.42 Sample Estate Tax Return for
the Death of an Unmarried
Individual in 2014
[New Chapter]
S-42.1
Death of an Unmarried Individual in
2014
CH.43 Sample Estate Tax Return for
an Estate Making a DSUEA
Election, Death in 2014
[New Chapter]
S-43.1
Death of the First Spouse in 2014
(DSUEA)
S-43.2
Electing Out of the DSUEA in 2014
General Form of the Return
The Ovation
O.1
Afterword
O.6
Rolling the Credits
O.7
Index of Terms
S-O.1 Index of Terms
O.27 Index of Cases
S-O.23 Index of Cases
O.31 Index of Movies
S-O.27 Index of Movies