- 27 - Committee Reports can be made after death of the donor spouse, per I.R.C. � 2513(a)(1) and I.R.C. � 2513(b)(2), and the non-donor survivor is jointly and severally liable for the gift tax per I.R.C. � 2513(d). Thus, a terminally-ill person may intentionally make a “deathbed gift” of taxable value to third parties for tax avoidance purposes, hoping that his young and healthy spouse (and beneficiary of the remainder of his estate) will pay the gift taxes and thus effectively remove the gift tax from his tax transfer base, and her transfer tax base as well if she lives for 3 years from the time of his gifts. By basing the inclusion under section 2035(c) on the person who pays the gift tax and then dies within 3 years, rather than the person who makes the gift, Congress intentionally created a situation where a single individual does not have rights and protection equal to those of a married individual. We are unimpressed with the estate’s argument, which brings to mind Justice Holmes’s description of an equal protection claim as “the usual last resort of constitutional arguments”. Buck v. Bell, 274 U.S. 200, 208 (1927). The committee report quoted above merely describes the coordination of sections 2035(c) and 2513. The coordination of these two sections does not, in and of itself, result in favored treatment to married donors.15 As previously discussed, the purpose of the gross-up rule is to reduce disparities in the taxation of lifetime and deathtime transfers by effectively taxing gifts made within 3 years of death on a tax-inclusive basis (rather than on the tax-exclusive basis that normally pertains to gifts), thereby ensuring that assets used to pay gift taxes on these gifts do not escape the 15 The estate does not argue that the gift-splitting provisions of sec. 2513 are per se unconstitutional.Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Next
Last modified: May 25, 2011