What’s the Plan?

Will we see a possible revival estate, gifts, and trusts regulatory projects deferred or made a low priority by the Trump administration?

Will Biden administration revive a project for that valuing promissory notes used in estate and gift tax planning?

Planners often sell assets to a trust in exchange for a promissory note.

The trust must repay the loan and interest principal, with a minimum rate set by the IRS. 

If the assets appreciate faster than the minimum rate, that appreciation passes, free of gift tax, to the trust beneficiaries. 

The IRS has been challenging this type of transaction with the use of promissory notes when the transaction lacks economic substance. The IRS argues that the terms of the deal are too good to have economic substance.

Mrs. Versprille in Washington at Bloomberg Tax