Applicable Federal Rates Chart – Through December 2018

See chart here.

In a low-interest rate environment, loans by wealthy parents to children often makes sense from a planning perspective. If the recipient can invest the proceeds and earn more than the low interest rate charged, the net profit is effectively transferred without a taxable gift.

It is important that the loan be respected as a loan and not a gift. A recent Tax Court Memorandum decision dealt with this issue. In the case, the taxpayer had made significant loans over time from 1984 to 2007. The issue was whether these were bona fide loans or taxable gifts.

The Tax Court noted the traditional factors in determining whether a transfer is a loan or a gift – namely these factors support a loan: ( 1) there was a promissory note or other evidence of indebtedness, (2) interest was charged, (3) there was security or collateral, (4) there was a fixed maturity date, (5) a demand for repayment was made, (6) actual repayment was made, (7) the transferee had the ability to repay, (8) records maintained by the transferor and/or the transferee reflect the transaction as a loan . . .

25 Aug 2020

Congratulations to Jenna Rubin – RPPTL Rising Star Award Recipient

Jenna G. Rubin received the 2019-2020 Real Property, Probate and Trust Law Section (“RPPTL”) Rising Star Award. The Rising Star honor recognizes members of the RPPTL section of the Florida Bar who demonstrate the potential for future leadership through their active participation in section committees and projects. It may be awarded annually to a member of each of the divisions of the section who have made significant contributions to the section. Jenna currently serves as a Vice Chair of the RPPTL Trust Law Committee, the Ad Hoc Committee on Electronic Wills and the Elective Share Review Committee. She was recognized for her contributions to those Committees as well as her writing and speaking for the Section. Congratulations Jenna!

09 Aug 2020

GRANTOR TRUSTS OWNING AN ANNUITY

The income tax treatment of annuities is provided for under Code § 72. That section provides various rules, including extra income tax for some distributions to younger taxpayers and limits on deferral for entity owners. The provisions can be difficult to interpret when the owner of the annuity is a grantor trust, and the annuitant and current beneficiary of the trust is not the grantor. A recent private letter ruling gives the IRS’ take on some of these issues. The following conclusions are based on the above scenario – a grantor trust is the owner of the annuity, and there is a current beneficiary that is not the grantor and whose life is the measuring life for the annuity.

Code § 72(q) 10% additional tax on early distributions. This provision imposes. . .

19 Jul 2020

Applicable Federal Rates – August 2020

For the applicable federal rates for the above month, preceding months, and a data table that visually shows trends. . .

17 Jul 2020

Jenna Rubin appears on Wealth and Law Podcast

Jenna Rubin joined Brent Nelson and Rachel Sass to talk about electronic wills, differences between the Arizona and Florida electronic will statutes, how these wills work, the current limitations of electronic wills, and to prognosticate about electronic wills’ future.

Episode 8: Electronic Wills

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