As I have previously discussed, Anna Nicole Smith’s estate dispute left its mark on estate planning. Now it appears that we might have some more to learn from her late husband, J. Howard Marshall II. In the mid-90s, Marshall sold some of the shares that he owned in his company back to the company itself. This increased the value of all the stocks, including those held by his children. The IRS determined that this was a gift and a taxable event; therefore, the IRS determined that his estate that owed a tax on that transfer with interest on the tax. The beneficiaries of the estate did pay the full amount, and argued that it ended their liability under I.R.C. § 6234(b) and that § 6901 does not establish further liablity. The Government argued that § 6234(a)(2)4 does establish independent liablity. There arguments were based upon two conflicting cases in the federal court of appeals.
The court in United States v. Robert S. MacIntyre et al. stated that while § 6234(b) imposes liablity it limits it to the amount of the gift that was received by the party. In addition, the court also concluded that it should end the donee’s liablity in this case, but still noted that § 6901 does allow the Government to receive interest on the gift.
See Robert L. Moshman, Transferee Liability for Gift Tax, The Estate Analyst, June 2012.
