Notice 2009-19 applies to taxpayers making gifts in trust during 2010. Under Section 2511(c), a transfer of property to a non-wholly owned grantor trust is a transfer by gift of the entire interest in the property. To determine whether a transfer to a wholly owned grantor trust constitutes a gift, the gift tax provisions in effect prior to 2010 apply.
Part III. Administrative, Procedural, and Miscellaneous Guidance for Persons Making INTERIM PROVISIONS 26 CFR 601.105: Examination of returns and claims for refund, credit or abatement; determination of cor- Transfers in Trust After rect tax liability. Some taxpayers may have inaccurately December 31, 2009 interpreted section 2511(c) as excluding (Also: Part 1, §§ 6662, 6694, 1.6662–4, 1.6694–2.) from the gift tax transfers to a trust treated Notice 2010–19 as wholly owned by the donor or the Rev. Proc. 2010–15 PURPOSE AND BACKGROUND donor’s spouse under subpart E of part I of subchapter J of chapter 1, even though SECTION 1. PURPOSE This notice alerts taxpayers that the those transfers would otherwise be tax- Internal Revenue Service (IRS) intends able under Chapter 12. The provisions of This revenue procedure updates Rev. to issue guidance under section 2511(c) Chapter 12 regarding the substantive law Proc. 2008–14, 2008–1 C.B. 435, and of the Internal Revenue Code. Congress applicable to the gift tax were not amended identifies circumstances under which the enacted this section in section 511(e) of by EGTRRA, and those provisions con- disclosure on a taxpayer’s income tax re- the Economic Growth and Tax Relief Rec- tinue to apply to all transfers made by turn with respect to an item or a position onciliation Act of 2001 (EGTRRA) and donors during 2010. Section 2511(c) is an is adequate for the purpose of reducing amended it in section 411(g)(1) of the addition to those substantive law provi- the understatement of income tax under Job Creation and Worker Assistance Act sions and is applicable to transfers made in section 6662(d) of the Internal Revenue of 2002. Public Laws 107–16, 115 Stat. 2010. Section 2511(c) broadens the types Code (relating to the substantial under- 71, and 107–147, 116 Stat. 46. Section of transfers subject to the transfer tax un- statement aspect of the accuracy-related 2511(c) is effective for transfers made der Chapter 12 to include certain transfers penalty), and for the purpose of avoiding after December 31, 2009, and before Jan- to trusts that, before 2010, would have the tax return preparer penalty under sec- uary 1, 2011. been considered incomplete and, thus, not tion 6694(a) (relating to understatements Section 2511(a) generally provides that subject to the gift tax. Accordingly, each due to unreasonable positions) with re- the gift tax shall apply to transfers in trust transfer made in 2010 to a trust that is not spect to income tax returns. This rev- or otherwise, whether direct or indirect. treated as wholly owned by the donor or enue procedure does not apply with re- Under § 25.2511–2(b) of the Gift Tax Reg- the donor’s spouse under subpart E of part spect to any other penalty provisions (in- ulations, a gift is complete when the donor I of subchapter J of chapter 1 is considered cluding the disregard provision
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