www.mcguirewoods.com

Hot Topics in Estate and Trust Planning and

Administration

Charles D. Fox IV

McGuireWoods | 1

McGuireWoods – 2

Current Legislation

1. Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) (March 27, 2020)

Ø Congress enacts legislation in response to the public health and economic crisis resulting from the Covid-19 pandemic

McGuireWoods – 3

2. Setting Every Community Up for Retirement Enhancement (“SECURE”) Act (December 17, 2019)

Ø Secure Act has large impact on retirement benefits

McGuireWoods – 4

4. For the 99.8 Percent Act, S. 309 (Introduced January 31, 2019) and H.R. 4857 (Introduced October 24, 2019) Ø Senator Sanders and Representative Gomez

introduce identical bills to change the estate tax

McGuireWoods – 5

5. H.R. 218 (January 3, 2019) and S. 215 (January 24, 2019)

Ø Death Tax Repeal Acts Introduced in House and Senate in 2019

McGuireWoods – 6

7. 2019-2020 Priority Guidance Plan (October 9, 2019)Ø Treasury Department and Internal Revenue

Service release their 2019-2020 Priority Guidance Plan

McGuireWoods – 7

8. Final Treasury Regulation § 20.2010-1(c) (November 22, 2019)

Ø Treasury Department issues proposed anti-clawback regulations

McGuireWoods – 8

15. James C. Nelson v. Commissioner, T.C. Memo 2020-81

Ø Tax Court finds that formula for gift and sale of limited partnership interests at a discount is not a defined value formula and additional gift tax is imposed

McGuireWoods – 9

16. Estate of Mary P. Bolles v. Commissioner, T.C. Memo 2020-71

ØAdvances made by decedent to son lost characterization as loans and became gifts of inheritance advances when decedent realized loans would not be repaid

McGuireWoods – 10

17. Burt Kroner v. Commissioner, T.C. Memo 2020-73

Ø Transfers from business associate were not gifts excludable from income under Code Section 102

McGuireWoods – 11

18. Badgley v. United States, _____ F.3d _____ (9th Cir. 2020)

Ø Assets of GRAT are included in settlor’s estate when settlor dies before end of annuity term

McGuireWoods – 12

19. Estate of Clara M. Morrissette v. Commissioner, Tax Court Order, Docket No. 4415-14 (June 21, 2018)Ø Court denies partial summary judgment motion of estate that

Section 2703 does not apply to split-dollar arrangement

McGuireWoods – 13

20. Cahill v. Commissioner, T.C. Memo 2018-84Ø Taxpayer’s motion for summary judgment with

respect to split-dollar arrangement is denied

21. Estate of Frank D. Streightoff v. Commissioner, ___ F.3d ___ (5th Cir. 2020)

Ø Fifth Circuit upholds decision of Tax Court imposing additional estate tax liability for limited partnership interest included in estate

McGuireWoods – 14

22. Kress v. United States, 372 F.Supp. 3d 731, (E.D. Wis. 2019)

ØTax Court rejects IRS’s valuation of minority interests in closely held S Corporation stock given to family members over three years

McGuireWoods – 15

24. Estate of Aaron U. Jones v. Commissioner, T.C. Memo 2019-101

Ø Tax Court determines gift tax value of limited partnership units in voting and non-voting shares of stock and related timber land management and lumber entities

McGuireWoods – 16

25. CCA 201939002 (Issued May 29, 2019; Released September 27, 2019)Ø Determination of fair market value of publicly

traded stock for gift tax purposes should take into account pending merger

McGuireWoods – 17

26. Estate of Moore v. Commissioner, T.C. Memo 2020-40

Ø Tax Court holds that assets in family limited partnership should be taxed in decedent’s estate at their full fair market value

McGuireWoods – 18

27. Blau v. Commissioner, ___ F. 3d____ (D.C. Cir. 2019)

ØD.C. Circuit Court upholds decision of Tax Court finding that taxpayer was not entitled to income tax charitable deduction and imposition of 40 percent penalty for underpayment of tax was appropriate

McGuireWoods – 19

30. I.R. – 2019-182 (November 12, 2019)

Ø IRS increases enforcement action of Syndicated Conservation Easements

McGuireWoods – 20

31. Village at Effingham, v. Commissioner,T.C. Memo 2020-102; Riverside PlaceLLC v. Commissioner, T.C. Memo2020-103; Maple Landing, LLC v.Commissioner, T.C. Memo 2020-104;and Englewood Place, LLC v.Commissioner, T.C. Memo 2020-105

ØTax court denies income tax charitable deduction for donations of conservation easements

McGuireWoods – 21

40. Kimberly Rice Kaestner 1992 Family Trust v. North Carolina Department of Revenue, ____ N.C. ____ (2019)

Ø U.S. Supreme Court holds that income taxation of out-of-state trust is unconstitutional

McGuireWoods – 22

41. Fielding v. Commissioner, 916 N.W.2d 323 (Minn. 2018)

Ø Attempt of Minnesota to tax irrevocable non-grantor trusts as resident trusts for state income tax purposes is unconstitutional under the due process clauses of United States and Minnesota Constitutions

42. Proposed Regulations on Section 67(g) (May 7, 2020)

Ø IRS issues proposed regulations on effect of Section 67(g) on certain deductions for estates and nongrantor trusts

McGuireWoods – 23

46.Letter Ruling 202022002 (Issued February 25, 2020; Released May 29, 2020)

ØThird party treated as grantor of irrevocable trust

McGuireWoods – 24

47. Indiana Senate Bill 265 (May 5, 2019)Ø Indiana enacts self-settled asset protection trust

legislation

McGuireWoods – 25

48. Connecticut House Bill 7104 (June 24, 2019)Ø Connecticut enacts self-settled asset protection

trust legislation as part of its adoption of the Uniform Trust Code

McGuireWoods – 26

72. United States v. Johnson, ___ F. 3d ____ (10th Cir. 2019)

Ø Four children held responsible for unpaid federal estate taxes on stock received from mother’s trust following mother’s death

McGuireWoods – 27

73. Billy F. Hawk, Jr., GST Non-Exempt Marital Trust v. Commissioner, ___ F. 3d ___ (6th

Cir. 2019)Ø Sixth Circuit affirms Tax Court decision holding

estate and decedent’s wife liable as transferees for a bowling alley’s unpaid income taxes resulting from sale of business after decedent’s death

McGuireWoods – 28

78. Comptroller of the Treasury v. Taylor, 189 A.3d 799 (Md. Ct. Spec. App. July 25, 2018), reversed by Maryland Court of Appeals, 21-C-15-055059 (July 29, 2019); In re Estate of Seiden, NYLJ 10/12/18 p. 23, col. 5 (N.Y. County Surr. Ct.) (addressed by New York State Legislature in April 2019 Executive Budget

Ø Maryland and New York Courts address impact of federal QTIP elections on calculation of state death taxes

McGuireWoods – 29

81. Changes in State Death Tax Exemptions from 2019 to 2020

McGuireWoods – 30

Ø Numerous changes occur in state death tax exemptions for 2020 because of legislation or inflation adjustments

82. 2020 State Death Tax Chart (as of January 27, 2020)

McGuireWoods – 31