- 9 - determination that the value of the annuity retained by each grantor should be calculated based on the shorter of a fixed term or the earlier death of the grantor. Discussion I. General Rules Section 2501 imposes a tax for each calendar year on the transfer of property by gift by any taxpayer. Pursuant to section 2512, the value of the transferred property as of the date of the gift “shall be considered the amount of the gift”. Generally, where property is transferred in trust but the donor retains an interest in such property, the value of the gift is the value of the property transferred, less the value of the donor’s retained interest. See sec. 25.2512-5A(e), Gift Tax Regs.; sec. 25.2512-5T(d)(2), Temporary Gift Tax Regs., 64 Fed. Reg. 23224 (Apr. 30, 1999). However, if the gift in trust is to a family member (as defined in section 2704(c)(2)), the value of the gift is determined subject to the limitations of section 2702. See id. In the case at bar, petitioners assert that each grantor’s retained interest is to be valued as a single annuity based on two lives, referred to as a dual-life annuity. Respondent asserts that each grantor’s retained interest is to be valued as a single-life annuity. Valuation of a retained interest as a dual-life annuity produces a greater retained value thanPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011