-10-
generally 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.; see also sec. 25.2702-2(a)(3), Gift Tax Regs.
(the term “retained” means held by the same individual both
before and after the transfer). If a gift in trust is to a
family member, however, the value of the gift is determined by
reference to section 2702(a)(2). See sec. 2702(a)(1). Section
2702(a)(2)(A) provides that the value of a retained interest that
is not a qualified interest is zero (thus, the value of the gift
is the value of the entire property). Section 2702(a)(2)(B)
provides that the value of a retained interest that is a
qualified interest is determined under section 7520.
Section 2702(b) defines the term “qualified interest” as:
(1) any interest which consists of the right to
receive fixed amounts payable not less frequently than
annually,
(2) any interest which consists of the right to
receive amounts which are payable not less frequently
than annually and are a fixed percentage of the fair
market value of the property in the trust (determined
annually), and
3(...continued)
spouse, the transferor is considered to have retained that
interest for Federal gift tax purposes. See Cook v.
Commissioner, 269 F.3d 854, 858 (7th Cir. 2001), affg. 115 T.C.
15 (2000); Cook v. Commissioner, 115 T.C. at 24; sec.
25.2702-2(a)(5), Gift Tax Regs.; see also sec. 25.2702-2(d)(1),
Example (6), Gift Tax Regs. A transfer of an interest in
property with respect to which there are one or more term
interests is treated as a transfer of an interest in a trust.
See sec. 2702(c)(1). A term interest is an interest for life or
for a term of years. See sec. 2702(c)(3).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011