In this case, the Wimmers created a family limited partnership that held securities that produced dividends. Over the course of 5 years, the Wimmers decided to transfer shares of the FLP to their son. They also decided to transfer shares of the FLP to an irrevocable trust that was established to provide support for their grandchildren. The transfers of shares of the FLP were created to qualify for the annual gift tax exclusion, but an estate tax audit concluded that the shares did not qualify for the annual gift tax exclusion under Section 2503(b) of the I.R.C. The IRS imposed a $260,000 tax deficiency against Mr. Wimmers’ estate.
The tax court in Estate of George H. Wimmer v. Comm’r held that the shares of the FLP could qualify for the annual gift tax exclusion because “1) the FLP regularly generated income; 2) the income was directed to the drones; and 3) the distributable amounts were ascertainable.”
See Robert L. Moshman, Gift of FLP Qualified for Annual Exclusion, The Estate Analyst, June 2012.
