Originally published in Real Property, Trust And Estate Law Journal - Winter 2012

In This Article:

I. INTRODUCTION: THE SUPPOSED CLAW-BACK ...475

II. POSITING A ZERO SECTION 2001(b)(2) SUBTRACTIVE FOR POST-SUNSET CALCULATIONS ... 477

III. TENSE AND MOOD: LOCATING THE NON-ZERO SUBTRACTIVE BY CONJUGATION ...479

A. Tense ...479

B. Mood ...480

IV. CONCLUSION ... 481

Excerpt from I. INTRODUCTION: THE SUPPOSED CLAW-BACK

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Act) created a two-year gift tax “applicable exclusion amount” of $5 million. This represents what may be a brief opportunity for someone who will die in 2013 or later to reduce her estate tax base, without paying gift tax, by a $4 million margin that has not previously been, and under current legislation will not subsequently be, available. Practitioners have questioned the value of this opportunity, reasoning that post-2012 estate tax computations will include 2011 and 2012 gifts covered by the margin of the 2010 Act’s $5 million applicable exclusion amount in a way that will generate an estate tax to be clawed back from a decedent’s 2011 and 2012 donees. This article asserts that the claw-back is chimerical: on a careful reading of the relevant statutes, the sunset provision of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), as amended by the 2010 Act, is sufficient to prevent the computations hypothesized by proponents of the claw-back.