By: Martin M. Shenkman, CPA, MBA, JD

The decision has not been awarded in the prize fight between GRATs and IDITs, but the IRS has instituted certain revisions of the instructions for the estate tax return (Form 706, Part 4, Question 12c, page 3, for you accountant types). They ask executors to specifically disclose whether the decedent ever sold or transferred FLP, LLC, or closely held business interests to a trust existing at the date of death and over which the decedent had certain powers or interests. No more secrets from big brother! While many practitioners have long advised clients to report note sale transactions, to grantor trusts, on gift tax returns, some practitioners advised the opposite in order to hide the transaction. No more. Now that the laws are clear, there are no more excuses for not correctly reporting all transactions.

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