Article On Pending Cases Involving Sale To Grantor Trust With Defined Value Feature

Steve R. Akers (Senior Fiduciary Counsel, Bessemer Trust) recently published an article entitled, Pending Settlement Of Woelbing Cases (Involving Sale to Grantor Trust with Defined Value Feature), Bessemer Trust (2013). Provided below is an abstract of the article.

The IRS attacked sale to grantor trust transactions in two companion cases that were filed December 26, 2013 in the Tax Court. Estate of Donald Woelbing v. Commissioner, Docket No. 30260-13. Closely held stock was sold to grantor trusts in return for promissory notes from the trusts. The government disputed the valuation of the transferred closely held stock (even though the sales agreement stated that only shares having a value equal to the note amounts were being transferred), and also alleged that §2702 applied (to treat the notes as having a zero value) and that §§2036 and 2038 applied (so that the stock would be included in the seller’s estate at its date of death value).