Steven R. Akers, Senior Fiduciary Counsel at Bessemer Trust, has published article discussing the case of Estate of Beyer v. Commissioner .  The abstract reads as follows:

FLP Assets Included in Estate Under Section 2036(a)(1), Including Assets Attributable to Interests Sold to Grantor Trust; No Discount Allowed for Restricted Management Account; Gift Tax (and Penalties) Imposed Because of Failure to Make Five-Year Election for Gifts to Section 529 Accounts.

This Tax Court case involved a situation in which the parties failed to follow formalities in many respects, perhaps coloring the court’s view of the estate’s position. The court held that the bona fide sale for full consideration exception to Section 2036 did not apply. Various distributions had been made from the partnership to the decedent or for the decedent’s estate after his death (including paying the estate’s estate taxes) when the decedent and his estate were no longer a partner, and the court found that an implied agreement for retained enjoyment under Section 2036 existed. No discount was allowed for the assets in a four-year “restricted management account.”

In addition, the decedent did not properly make the “five-year averaging election” for gifts to Section 529 accounts, and gift taxes and penalties were imposed.

Download the full article at: Estate of Beyer v. Commissioner UPDATE by Steve R. Akers

Posted by Damien Lee, Associate Editor, Wealth Strategies Journal.