[EstGift] Should Discounted Sale to Grantor Trust be Reported on Gift Tax Return

[Don Marchand]

We created a limited liability company on behalf of our client (Husband)
who funded the LLC with cash and securities. After the initial funding
Husband and Wife each held .5% of the voting interest, and Husband held
98% in non voting interest. Shortly after formation Husband created a
grantor trust, funded the trust with seed money and sold his 98% to the
trust at a discounted price. Husband obtained an appropriate appraisal.
Husband filed a 2001 gift tax return reporting the seed gift to the
trust, but did not mention the sales transaction.

I understand that the IRS will be asking questions on the form 706 which
will require disclosure of the 2001 transaction. I am interested in
whether others are recommending filing or not filing amended 709s at
this time to get the statute running, and the risks and benefits.

 

 

Don

Donat C. Marchand, Esq.

Member

Ivey, Barnum & O'Mara, LLC

170 Mason Street

Greenwich, CT 06830

Tel:  203-661-6000

Fax:  203-661-9462

 

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