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Full-Text Articles in Law
Toward A Reality-Based Estate Tax, Wendy C. Gerzog
Toward A Reality-Based Estate Tax, Wendy C. Gerzog
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Currently, the estate tax does not accurately value the property and transactions that it is meant to cover. Additionally, the marital and charitable deductions do not reflect actual associated transfers, instead skewing their benefits away from their purported beneficiaries. This Article proposes reforming the estate tax by eliminating these sources of unreality and distortion, and to make the current estate tax a reality-based tax. Through six specific proposals, the Article identifies solutions to the problems associated with testamentary transfers, puts forth alternative methods of valuation to prevent gaming of transfer taxes, and offers significant modifications to two deduction provisions.
Merger Is Indirect Gift In Cavallaro, Kerry A. Ryan
Merger Is Indirect Gift In Cavallaro, Kerry A. Ryan
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In Cavallaro v. Commissioner, the Tax Court held that a merger of two family-owned businesses resulted in a substantial taxable gift. The taxpayers avoided penalties by demonstrating that they relied in good faith on the mistaken advice of competent tax advisers.
Valuation Lessons From Estate Of Adell, Kerry A. Ryan
Valuation Lessons From Estate Of Adell, Kerry A. Ryan
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In Estate of Adell, the Tax Court determined that the correct value of a decedent’s interest in a closely held corporation was the figure reported on the original estate tax return. The court rejected alternative values as either using the incorrect valuation method or failing to account for the significant value of a key employee’s personal goodwill.
Valuing Fractional Interests In Art For Estate Tax Purposes, Wendy G. Gerzog
Valuing Fractional Interests In Art For Estate Tax Purposes, Wendy G. Gerzog
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It is difficult to value fractional interests in art because there is virtually no market in those interests. Nevertheless, the Tax Court in Estate of Elkins valued the decedent’s fractional interests in multiple artworks, which the decedent and his children highly cherished. First, the court addressed the restricted agreements under section 2703 and then the court determined the value of decedent’s interests in the art.
Not All Defined Value Clauses Are Equal, Wendy G. Gerzog
Not All Defined Value Clauses Are Equal, Wendy G. Gerzog
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Defined value clauses used to value nonmarketable family limited partnership (FLP) interests create valuation distortions and other public policy issues. This paper describes these abuses and proposes the employment of restrictions similar to those applied to pecuniary formula marital deduction clauses.
The article explains how pecuniary formula marital deduction provisions created valuation distortions by allowing for undervaluation of the marital share that were remedied by the IRS’s Rev. Proc. 64-19 and the enactment of section 2056(b)(10). The article analyzes recent case law expanding the use of defined value clauses into the FLP area and criticizes the courts for not applying …
Excluding Expert Valuation Testimony, Wendy G. Gerzog
Excluding Expert Valuation Testimony, Wendy G. Gerzog
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In Boltar, a case in which the Tax Court addressed the valuation of a conservation easement, the court ruled on the admissibility of expert testimony.
Negron: Circuits Now Split 2-2, Wendy G. Gerzog
Negron: Circuits Now Split 2-2, Wendy G. Gerzog
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The article discusses Negron and the circuit split on the issue of whether to value non-assignable lottery payments in a decedent's estate by means of the actuarial tables or whether that value needs to be discounted for non-marketability.
Valuation Discounting Techniques: Terms Gone Awry, Wendy G. Gerzog
Valuation Discounting Techniques: Terms Gone Awry, Wendy G. Gerzog
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Fair market value is defined in the section 2031 Regulations. For its validity, that definition of fair market value relies on the normal definitions of its significant terms: a seller is someone who is seeking the highest price for her product and a buyer is someone who wants to obtain the lowest price for his purchase. It is only that tension that creates the realistic, and fair, market value of that asset. Indeed, without that conflict, the definition is comprised of hollow words.
In the context of family limited partnerships, terms have been misused. By utilizing the limited partnership shell, …
'Complete' Accrual Taxation, Fred B. Brown
'Complete' Accrual Taxation, Fred B. Brown
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Under the realization rule, accrued gains and losses generally are not taken into account for income tax purposes until a disposition occurs. Thus, the realization rule is responsible for tax deferral, which in turn likely leads to economic inefficiencies and inequities. The realization rule also contributes greatly to the complexity of the federal income tax system by necessitating numerous Internal Revenue Code provisions that address the many consequences arising from the decision to postpone taxation until a disposition occurs.
An alternative to the realization rule is accrual taxation - the inclusion in the tax base of annual increases and decreases …