Federal Taxes on Gratuitous Transfers Textbook

Bridget J. Crawford (Professor of Law, Pace Law School), Joseph M. Dodge (Stearns Weaver Miller Weissler Alhadeff & Sitterson Professor, Florida State University College of Law), and Wendy C. Gerzog (University of Baltimore School of Law) recently published their book entitled Federal Taxes on Gratuitous Transfers (Aspen 2011). A description of the book is below:

This book deals with the federal wealth transfer taxes and the federal income tax insofar as it bears on gratuitous transfers. The federal wealth transfer taxes as of 2011 consist of a unified estate and gift tax and a generation-skipping transfer tax. The federal transfer tax system is separate and apart from the federal income tax.

This coursebook differs (to a greater or lesser degree) from others in the same field in the following respects: (1) pervasive use of problems as a pedagogical tool; (2) emphasis on text, statutes, and regulations, rather than cases (especially cases that involve routine application of law to facts); (3) integration of related income tax materials, including the income taxation of estates and trusts; (4) relation of tax doctrine to tax planning strategies; (5) focus on doctrine that influences the practice of estate and trust law, rather than doctrine for its own sake; (6) integration, early on, of valuation issues into “taxability” material; (7) reference to state law (including recent developments) as it bears on transfer tax issues, with full coverage of issues raised by community property systems; and, (8) “building block” organization, rather than segmented organization according to Code sections.

To elaborate on the last item, the first chapter operates as a transition from courses in Property, Individual Income Taxation, and Estates and Trusts, and the second chapter provides an overview of the basic features of the federal transfer tax landscape. Thereafter, the book progresses from problems attendant upon routine or simple estates to those attendant upon wealthy estates with complex tax-oriented features. This organizational scheme renders it possible (if not optimally desirable) for the student to take this course concurrently with the basic courses in Income Tax and in Wills, Estates, and Trusts. The organizational format of this text entails the repetition of basic or important points, and the relationship of the fine points to the basics. In general, the intent has been to create a fresh view of the subject as of the year 2011, as opposed to bringing a previous effort up to date.

The book incorporates both the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (2010 Tax Act), P. L. 111-312, signed into law Dec. 17, 2010, and the Joint Committee on Taxation’s Technical Explanation of that legislation published for the U.S. Senate a week before the bill’s passage. See JCX-55-10, pp. 39-53 (Dec. 10, 2010). Sections 301-304 of the 2010 Tax Act include the reinstatement of the estate tax, the repeal of carryover basis for assets in a decedent’s estate, an election for decedents who died in 2010 to avoid estate taxes but to be subject to the carryover basis rules of §1022, new tax rates and exemptions, a new provision providing for portability of a deceased spouse’s unused exclusion amount, and the extension of the EGTRRA Sunset until the end of the year 2012.

The emphasis on text, analysis, and problems also renders this text suitable for an L.L.M. program in taxation. As the book progresses, it becomes more technical, with increased reference to drafting issues and commentary on controversial legal issues.

The organization (simple to complex estates), the frequent references to state law and income tax provisions, the descriptions of transactions and their uses, and the elaborate discussion concerning the drafting and use of formula clauses in relation to the marital deduction combine to make this book suitable for a tax-oriented estate planning course.

A reason to study the federal transfer taxes is that many doctrines of state law come into play primarily in a tax context. A leading example is the law of disclaimers. In the absence of the federal transfer taxes, various kinds of trusts (and, within trusts, powers of appointment), would be used much less often. Indeed, much of the “law” concerning trusts and powers of appointment is to be found in cases involving the federal transfer taxes.

Study of the federal transfer taxes well serves the development of skills relating to statutory exegesis, transactional analysis, and planning. The very nature of the subject, the transfer of wealth to the natural objects of one’s bounty and charity, is intrinsically forward-looking, as it is concerned with managing property around a future certain event, one’s death (and thereafter).