IRS Prevails in Section 2036 Attack

Ori Bash, ASA (Vice President of Pluris Valuation Advisors LLC) recently published his article In Estate of Adler, Section 2036 Trumps Fractional Interest Discounts, Wealth Strategies Journal, Mar. 4, 2011. The article presents the background information and the court discussion from Adler v. Commissioner where the IRS prevailed in a Section 2036 attack. The commentary is below:

In Adler, the fact pattern clearly points to a Section 2036 ruling. From a tax perspective, the Adler estate would have been better served had Adler, after transferring the fractional interests, given up control of the subject property and paid rent to his children. We note that, had the discounts been allowed as reported, the subject interests would have been valued at approximately $4,080,000.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.