Tax Court Issues Ruling On Gift Tax Applied To Property Transfer

On Wednesday the U.S. tax court issued an opinion stating that an agreement to pay the estate tax on a transferred property lowered the value of that property and exempted the beneficiaries from a $1.8 million gift tax on the transfer.  The court reasoned that a hypothetical agreement between a willing buyer and seller to pay the estate tax would be a detriment to the buyer and would cause such a buyer to ask for a reduction in the price of the property.  This decision will provide estate planners with more clarity on how gift taxes are to be applied.  The U.S. tax court decision can be read here.

See Eric Kroh, Tax Court Wipes Out $1.8 M Gift Tax On Property Transfer, Law 360, September 16, 2015.