Very few taxpayers prevail in the U.S. Tax Court. Why? First, because the Internal Revenue Service (“IRS”) usually settles with taxpayers who have attractive facts. Second, because perhaps as many as 90% of all taxpayers represent themselves.
So it is refreshing to report on three taxpayer victories in the estate and gift tax area that occurred in the space of just over a month. These taxpayer victories are helpful because, until the end of 2012, each taxpayer has a $5,120,000 gift tax exclusion. On January 1, 2013, it will decrease to $1,000,000. The Obama Administration has proposed a $3,500,000 exclusion. Some Republican Senators introduced a bill to repeal the estate tax. The uncertainty has motivated many taxpayers to engage in gift tax planning now. These favorable cases will make the use of some important tax planning structures much more comfortable.
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