On occasion, one hears that a potential strategy for exploiting opportunities in the tax code is by finding provisions in which some event is “deemed” to occur. IRC § 2055(a) essentially “deems” the “complete termination of a listed power for the benefit of an individual by reason of death or ‘for any other reason’ to be a qualified disclaimer for purposes of the estate tax charitable deduction.” Without this provision, such a termination would not meet qualified disclaimer requirements under IRC § 2518. The result of the “deemed” event in § 2055(a) is the creation of an immediate tension between this section and all other Code sections. The various outcomes stemming from this tension range from good to odd to poor. Given this, it may be worth pondering whether the Treasury Department might address these issues by promulgating regulations that the language in § 2055(a) applies for all tax purposes and is not limited to that section alone.
See Sanford J. Schlesinger & Andrew S. Auchincloss, A Deemed Disclaimer, Probate and Property Magazine, December 2017.
