Tax News

CCH (cch.taxgroup.com) reports:

 
Proposed Reg. §20.2036-1 addresses certain comments received in response to NPRM REG-119097-05, which was adopted by the IRS on July 14, 2008, in T.D. 9414 (TAXDAY, 2008/07/14, I.6). Instead of incorporating particular comments into the final regulations, a separate notice of proposed rule making has been issued. The proposed regulations provide the method for determining the portion of a trust includible in the grantor's gross estate if the grantor held a graduated retained interest in property, or in trust, specifically grantor retained trusts (GRTs) or charitable remainder trusts (CRTs). Under the proposed regulations, the methodology for calculating the amount of corpus required to satisfy a grantor's retained graduated interest is the sum of the following: (1) the amount of corpus required to generate sufficient income to pay, without reducing or invading principal, the annual amount payable to the decedent at death calculated pursuant to Reg. §20.2036-1(c)(2)(i); and (2) for each succeeding year of the trust, the amount of corpus required to generate sufficient income to pay, without reducing or invading principal, the increase (if any) in the annuity, unitrust, or other payment for that year, deferred until the beginning date of that increase. The proposed regulations also added
Proposed Reg. §20.2036-1(c)(2)(iii), Example 7 to illustrate the computation. In addition the proposed regulations amended Reg. §20.2036-1(b)(1)(ii) to include the six steps required to calculate the amount includible in a decedent's estate if the decedent retained a right to receive an annuity or other payment that was not income after the death of the current recipient. Example 1 of Reg. §20.2036-1(c)(1)(ii), was expanded to illustrate this computation and amended in response to previous comments. The proposed regulations are generally applicable to the estates of decedents dying on or after the date that the regulations are published as final.

  The IRS has requested comments on the proposed regulations. Written and electronic comments must be received by July 29, 2009. Written comments should be sent to CCA:LPDR (REG-119532-08), IRS, Room 5203, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044. They may also be hand-delivered to the IRS Courier's Desk. Electronic comments can be submitted via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-119532-08).

Proposed Regulations, NPRM REG-119532-08, FINH ¶41,139

Other References:

 
Code Sec. 2036

  CCH Reference - FINH ¶4930

  Tax Research Consultant

  CCH Reference - TRC ESTGIFT: 18,254