AICPA Submits Comments on Decanting to IRS

The American Institute of CPAs responded to the IRS request for comments about the concept of decanting. Decanting occurs when a trustee transfers the principal on one irrevocable trust to a different but similar trust. The AICPA argued that decanting transfers should not be given the same tax treatment as other transfers, such as gifts or generation skipping transfers, because those types of transfers change the beneficiary who has an interest in the property, whereas the beneficiaries remain the same with decanting transfers. The AICPA’s response also included comments on other tax issues, and how decanting statutes have affected foreign trusts. The comments submitted did not discuss issues relating to particular state decanting statutes.

See Comments on Notice 2011-101 regarding Transfers by a Trustee From an Irrevocable Trust to Another Irrevocable Trust (Decanting); Requests for Comments (12/27/2011), AICPA, June 26, 2012.