Gift Tax Special Valuation Final Regulations Issued
On February 25, 2005, the IRS issued final regulations for § 2702 dealing with gift tax special valuation rules. These regulations are deemed effective as of July 26, 2004. Below is an excerpt from the IRS summary:
[The] final regulations amend[] the regulations under the gift tax special valuation rules to provide that a unitrust or annuity interest payable for a specified term of years to the grantor, or to the grantor’s estate if the grantor dies prior to the expiration of the term, is a qualified interest for the specified term. The final regulations also clarify that the exception treating a spouse’s revocable successor interest as a retained qualified interest applies only if the spouse’s annuity or unitrust interest, standing alone, would constitute a qualified interest that meets the requirements of § 25.2702-3(d)(3), but for the grantor’s revocation power.