Article on Estate of Powell

Steve R. Akers recently published an Article entitled, Estate of Powell v. Commissioner, 148 T.C. No. 18 (May 18, 2017), Bessemer Trust (June 2017). Provided below is an abstract of the Article:

This “reviewed” Tax Court decision may be the most important Tax Court case addressing FLPs and LLCs in the context of estate planning since the Bongard case (12 years ago). The Tax Court breaks new ground (1) in extending the application of §2036(a)(2) to decedents owing only limited partnership interests, and (2) in raising the risk of double inclusion of assets under §2036 and a partnership interest under §2033, which may (in the court’s own words) result in “duplicative transfer tax.”

The facts involve “aggressive deathbed tax planning,” and the fact that the taxpayer lost the case is no surprise. But the court’s extension of the application of §2036(a)(2) and the extensive discussion of possible double inclusion for assets contributed to an FLP or LLC are surprising (but whether a majority of the judges would apply the double inclusion analysis is not clear).

Special thanks to Scott M. Deke for bringing this article to my attention.