Gift Tax Research Articles

A Study of Abolition of Inheritance & Gift Tax and Conversion into Capital Gains Tax

A Study of Abolition of Inheritance & Gift Tax and Conversion into Capital Gains Tax

An Empirical Investigation on the Taxpayer's Tax Benefits and the Evaluation Accuracy Resulting from the Discretionary Comparables Method in Inheritance and Gift Tax Valuation of Unlisted Stocks

An Empirical Investigation on the Taxpayer's Tax Benefits and the Evaluation Accuracy Resulting from the Discretionary Comparables Method in Inheritance and Gift Tax Valuation of Unlisted Stocks

Bill Would Have Far Reaching Effect on Gift and Estate Tax Valuation

Representative Earl Pomeroy (D. North Dakota) has introduced a bill, HR 436, that would have significant impact on the value of interests in real estate, investment holding and possibly operating entities, for estate and gift tax purposes. This echoes proposals made during the Clinton Administration. Certain aspects of the proposed bill seem to be difficult to discern and further refinements and debate are surely going to come if it moves forward in committee. But, if enacted, it or similar bills, will likely will change the valuation of these kinds of “property,” in many cases.

A study on the double taxation of capital gains tax and gift tax in case of low price or high price disposal of assets

A study on the double taxation of capital gains tax and gift tax in case of low price or high price disposal of assets

The Big, Bad FBAR: Reporting Foreign Bank Accounts to the U.S. IRS

The IRS and other U.S. agencies have long seen foreign bank accounts of U.S. persons as potential instruments for tax evasion and other violations of U.S. law. A significant tool for uncovering these violations is a requirement that persons 'subject to the jurisdiction of the United States' must annually report to the IRS any 'financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country.' This annual report is made to the IRS on Form TD F 90-22.1 ('Report of Foreign Bank and Financial Accounts'), often known as FBAR. Although the FBAR is filed with the IRS, subject to IRS rules, governmental uses of the reported information are not limited to tax enforcement.The IRS revised its rules on FBARs for the calendar year 2008, significantly increasing the number of people required to file it and the number of foreign accounts required to be reported. Because penalties for failing to file complete and accurate FBARs can be heavy, these revisions have provoked widespread concern among lawyers, accountants, and their clients. This paper, an except from the treatise, Boris I. Bittker & Lawrence Lokken, Federal Taxation of Income, Estates & Gifts, explains the current rules on FBARs.

The Payment in Kind of Gift Tax : A case study of 19-1 KCCR 600, 2006Hun-Ba49, May 31, 2007

the Payment in Kind of Gift Tax : A case study of 19-1 KCCR 600, 2006Hun-Ba49, May 31, 2007

A Study on the Transfer Taxation Reform: The Abolition of The Federal Estate Tax in the United States and The Catch-all Clause of Korean Gift Tax

A Study on the Transfer Taxation Reform: The Abolition of The Federal Estate Tax in the United States and The Catch-all Clause of Korean Gift Tax

Time Traveling to Strangle Strangi (and Kill the Monster Again), Part 2

In Part 2 of this article, the author argues that the solution to the problems of the Strangi cases detailed in Part 1 (see Tax Notes, Aug. 13, 2007, p. 563) is repeal of section 2036 and the other estate tax sections that include in the estate gifts made with retained 'strings'. The author proposes that repeal of these estate tax provisions will end for all time the problematic application of section 2036 to partnership and corporate interests. The author proposes coupling repeal with a change treating most irrevocable transfers with 'strings' attached as complete for gift tax purposes. The author believes that the opportunity to establish flexible succession plans without running afoul of section 2036 will encourage business owners, particularly small business owners, to make gifts implementing those plans. Thus the author's change is likely to produce gift tax revenue to help offset other reductions in the estate tax. The author also considers some of the technical issues in implementing his proposed tax changes.

Switzerland: charitable giving and taxation of charities

The article covers, from a Swiss perspective, various tax aspects of running a Charity in Switzerland, focusing primarily on Profit, Gift and Inheritance Tax. It also discusses the requirements of tax exemption and consequential limitations on the purposes by Charities. The article deals with international aspects of Charities, including Switzerland as a host state to Charities and the US Charitable Gift Trust. Furthermore, it highlights certain key aspects of value added tax relevant to Charities. Lastly, the article portrays tax consequences of donations made by a Swiss or foreign charity to a Swiss person. Keypoints Three out of four Swiss households make contributions to Charities. Switzerland has a strong federalist structure and, as a consequence, tax rates are not harmonized in Switzerland. On 22 June 2007, the Federal Assembly approved the Federal Act on the privileges, immunities, exemptions and financial contributions granted by Switzerland as host state. Tax exemptions exist for donations made to ‘The US Charitable Gift Trust’. Value added tax (VAT) implications of running a charity may be diverse and complex, due to the mix of subsidies, gratuitous and non-gratuitous deliveries. Nevertheless, VAT implications are often underestimated by the Charities themselves. Background Charitable giving in Switzerlandca few numbers In 2007, three out of four Swiss households made a contribution to Charities for general causes. The average amount per household amounted to CHF 355 (CHF 452 in 2006), as may be taken from a recently published study (http://www.gfs-zh.ch/ data/archiv/Fund2008.pdf). A different survey estimated that in 2007, the total of contributions made to Charities for general causes amounted to CHF 1210 millions, of which CHF 908 millions were received by members of the organization which published the survey. The organization (ZEWO) stated further that the total income of the organization’s members amounted to *Nedim Peter Vogt, Dr. iur., LL.M., Attorney at Law, Bar & Karrer AG, Brandschenkestrasse 90 CH-8027 Zurich, Switzerland. Tel: þ41 58 261 50 00; Fax: þ41 58 261 50 01; Email: nedimpeter.vogt@baerkarrer.ch **Tina Wustemann, lic. iur., LL.M., Attorney at Law Bar & Karrer AG, Brandschenkestrasse 90 CH-8027 Zurich, Switzerland. Tel: þ41 58 261 50 00; Fax: þ41 58 261 50 01; Email: tina.wuestemann@baerkarrer.ch ***Christoph Oliver Schmid, Dr. iur., Attorney at Law, Certified Tax Expert, Bar & Karrer AG, Brandschenkestrasse 90 CH-8027 Zurich, Switzerland. Tel: þ41 58 261 50 00; Fax: þ41 58 261 50 01; Email: christoph.schmid@baerkarrer.ch; Website: www.baerkarrer.ch The Author (2009). Published by Oxford University Press. All rights reserved. doi:10.1093/tandt/ttp043 approximately CHF 2535 millions (http://www. zewo.ch/pdf/zewoforum_4_08_d.pdf). The above figures by no means give an indication of the importance of Charities in Switzerland, since they do not include most charitable giving to large family foundations or foundations supporting the arts or other major cultural projects. Clients of our law firm alone are making charitable contributions in excess of several CHF 10 millions per year. Almost all wills and trust deeds prepared by our firm provide for large contributions to Charities. Clients without children or close relatives increasingly set up a Swiss foundation during their lifetime and retain a life interest for themselves. Swiss clients are generally very discrete about their charitable giving and in many instances wish to remain totally anonymous. Legal structures of Charities in Switzerland Almost all types of legal entities can be used as Charities, but the majority of Charities are either foundations (Stiftungen) or associations (Vereine). After a brief overview of the Swiss tax system, we will discuss the taxation of the Charities in Switzerland and will also outline how the recipient of a payment from a Charity is taxed. Overview of the Swiss tax system Switzerland has a strong-federalist structure, which is evident even in its tax system: while certain, primarily indirect taxes are levied only by the Federal Government, other primarily direct taxes are levied by the Federal Government and the Cantons as well as the over 3000 Communes. The legislative power with regard to the Cantonal and Communal Taxes is generally with the 26 Swiss Cantons, although there is a Federal Law aiming at harmonizing the Cantonal Tax laws. Tax rates are not harmonized in Switzerland, but depend on the Canton and the Commune (sometimes, there are even different rates within one Commune due to different church tax rates, which are charged as a surplus on the Profit and Income Tax). Tax rates are not harmonized in Switzerland, but depend on the Canton and the Commune Taxation of a Charity In this section, we will discuss the taxation of a Charity. We will cover the tax aspects of the receipt of a donation, the operation of the Charity, ie its investment and its use of funds for the charitable or public interest.

U.S. Income Tax Accounting for Inventories

This paper is a chapter from a forthcoming third edition of volume 5 of Boris I. Bittker & Lawrence Lokken, Federal Taxation of Income, Estates and Gifts. It is a general description and analysis of U.S. income tax rules on inventory accounting. It covers general topics, such as the role of inventories in income computations and the requirement that some businesses use inventories in computing taxable income. It also discusses more specialized topics, including several variations of the last-in-first-out (LIFO) method and the requirement that securities dealers use a mark-to-market system for their inventories.

The 2009 Reform of the German Inheritance and Gift Tax Act

Following a decision by the German Federal Constitutional Court, the German Parliament was left the choice of either following the Austrian example and have its Inheritance and Gift Tax Act (IGTA) expire, or to implement new valuation rules by 31 December 2008. Having chosen the latter path, an IGTA-Reform Act (IGTA-RA) was passed effective as of 1 January 2009. Pursuant to this IGTA-RA, every asset is now being valued at an approximation of its fair market value. At the same time, however, tax allowances were elevated and significant tax exemptions were introduced with respect to the acquisition of business assets and owner-occupied family homes in particular. The article provides an overview of the new German IGTA as amended by the IGTA-RA.

Sweat Equity as a Gift: Venture Capital Investments and Tax Law in Japan

We can observe a typical two-sided agency problem between human capital providers (entrepreneurs) and monetary capital providers (venture capitalists) in a venture company. If one party feels too much risk, she will hesitate to invest her capital. To maximize each party's payoff, both parties need to bargain with each other to motivate each other to invest their respective monetary and human capital. The incentive bargain will be made on control sharing and value sharing. In Silicon Valley, such a two-sided agency problem is resolved by making entrepreneurs abandon control to venture capitalists and complementarily giving entrepreneurs additional cash-flow right as equity. Japanese tax law is, however, hostile to the use of equity as an incentive. Particularly, the Japanese National Tax Agency might challenge the sweat equity practice as a gift and entrepreneurs would be required to pay gift tax. As a result, sharing cash-flow rights cannot be complementary to sharing of control, and the two-sided agency problem is not yet solved.

Review of 2008 Inheritance Tax and Gift Tax Law Cases

Review of 2008 Inheritance Tax and Gift Tax Law Cases

Valuation Method of Unlisted Stocks Reasonable in the Inheritance and Gift Tax Law

Valuation Method of Unlisted Stocks Reasonable in the Inheritance and Gift Tax Law

Foreign Base Company Sales Income under the New U.S. Regulations

U.S. shareholders of a controlled foreign corporation (CFC) are currently taxed by the United States on their ratable shares of the CFC's subpart F income, even if the CFC distributes none of its earnings to shareholders as dividends. The Treasury, in late 2008, revised its regulations on one category of subpart F income, foreign base company (FBC) sales income. The revisions address contract manufacturing arrangements, which U.S. multinationals often use in overseas production, at least sometimes with a purpose of avoiding the impact of the U.S. CFC rules. The revisions also restate some of the rules on branches of CFCs, which often operate in conjunction with the rules on contract manufacturing. This paper describes U.S. law on FBC sales income, after the regulation revisions. It is a draft of material that will be published in Boris I. Bittker & Lawrence Lokken, Federal Taxation of Income, Estates & Gifts (Warren, Gorham & Lamont).

Life Insurance and Wealth Management: A Perfect Combination for the Ultra-Affluent

Wealth management should not be done in a vacuum. It is part of the client’s overall financial plan. The wealth manager is concerned with the client’s goals, including the tax implications. However, although income taxes are always taken into account, transfer taxes—estate, gift, and generation-skipping taxes—are not. The astute wealth manager can add value to the relationship by being aware of the client’s estate plan. It is possible for assets under management to be used to enhance the overall estate plan by combining them with life insurance. It is done with a strategy that is legally “clean.”If done properly, the client will be able to pass on a substantial amount of wealth, not have any gift taxes, estate taxes, or generation-skipping taxes, and the client should be very grateful to you for bringing them the concept. <b>TOPICS:</b>Wealth management, legal/regulatory/public policy

Property Taxes Reforms in the Czech Republic

The aim of this article is to show and describe changes in property taxes regulation: new possibilities of municipalities to influence real estate taxes, new exemptions of relatives from inheritance tax and gift tax and tendencies to abolish these taxes at all, tax reductions for new motor vehicles, etc. As we can see, property taxes are slowly loosing their fiscal effects and fiscal functions not only in the Czech Republic and regulation function is becoming more important.

Population Aging, Elderly Migration and Education Spending: Intergenerational Conflict Revisited

Elderly have been increasingly targeted as a group to enhance economic development and the tax base in communities. A major factor in their rise in importance is the rapid increase in the number of retired elderly through aging of the U.S. population. While recent literature on elderly migration tends to focus on how elderly migration patterns are influenced by state fiscal variables, the reverse effect from elderly population on fiscal variables is very plausible as shown to be the case for estate, inheritance, and gift taxes by Conway and Rork (2006). In this paper, we reexamine the intergenerational conflict in education financing raised by Poterba (1997) using U.S. state and county level data that allows to analyze how preferences for education might vary across different elderly age groups, which has not been explored before. Moreover, this paper uses a variety of advanced econometric techniques to estimate the impact of elderly population and elderly migration on education spending. Our state and county regression results broadly support the presence of intergenerational conflict in education financing. We also find dramatic age heterogeneity in preferences for education spending among elderly migrants.

A Comparison of the New U.S. Expatriation Tax and the Canadian Departure Tax

ABSTRACT: The Heroes Earnings Assistance and Relief Tax Act of 2008 amended the anti-avoidance provisions of the Internal Revenue Code for an expatriating taxpayer. The new law requires expatriating taxpayers to report a deemed taxable sale and repurchase of assets at the time that they expatriate. This is a change from the prior law where an expatriating taxpayer could be taxed by the U.S. for ten years after expatriation. The new U.S. rules are similar to rules that have been used by Canada to tax expatriating Canadian residents. This paper sets out the new U.S. rules and compares them to the Canadian departure tax. As can be seen, there are a number of similarities between the two countries' laws. However, there are also some major differences. The U.S. rules are more limited in application than the Canadian rules. As well as income tax, the U.S. legislators are concerned with estate and gift taxes, whereas the Canadian legislators are not.

The Legacy of the Swedish Gift and Inheritance Tax, 1884-2004

This paper has two objectives. The first is to study the revenue from the gift, inheritance, and estate taxes in Sweden during more than a century. The second is to focus on a unique episode during the second half of the 1940s when gifts and gift tax revenue exploded. This episode has never before been discussed in the research literature. It gives an extremely clear illustration of behavioral response to taxes in general, and the impact of expectations of future tax increases in particular. It is also a very interesting episode in the economic history of Sweden. I have access to aggregate tax revenue data since 1884. Moreover, I have constructed a rich micro data set of all gifts reported during the period 1942–1949 in one county. A first main result is that gift tax revenue during the 1940s started to increase long before a new estate tax and increased wealth taxation were decided and implemented. The increase even began before the legislative process started. Second, both the number and the average values of gifts increased. Promissory notes were, in value, the most common way to give. Finally, gifts, inheritances, and estates were never important sources of tax revenue. Revenue as a share of GDP reached a peak already in the 1930s. The role of these taxes has instead primarily been equity and to provide integrity for other tax bases.