Correspondence to Treasury and IRS: Exemption from Application of Section 2511(c) to Delaware Incomplete Nongrantor Trust

Richard Nenno, Managing Director and Trust Counsel, Wealth Advisory Services, Wilmington Trust Company, wrote a correspondence to the Treasury and IRS.  The correspondence requests that the Treasury or IRS issue a notice or regulation exempting application of Section 2511(c) to the Delaware Incomplete Nongrantor (the "DING") Trust.  It explains that the DING Trust is an incomplete gift for gift tax purposes and a nongrantor trust for income tax purposes, and provides IRS precedent that held the same.  Nevertheless, it adds that because the DING Trust is "not wholly owned by the donor or donor's spouse" for income tax purposes, Section 2511(c) would treat the DING Trust as a transfer of property by gift.  Finally, it explains that the DING Trust does not allow for income shifting and, therefore, requests that the Treasury or IRS should issue guidance that exempts the application of Section 2511(c) to the DING Trust.

See also Company Seeks Exemption for Trust Under Provision on Gift Tax Treatment of Transfers in Trust, 2010 TNT 46-23, March 10, 2010.

Posted by Neil I. Rumbak, Associate Editor, Wealth Strategies Journal.