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Wednesday, June 20, 2012

Crawford: Gift Tax Completion and Retained Powers

Tax Analysts Bridget J. Crawford (Pace), Gift Tax Completion and Retained Powers, 135 Tax Notes 1533 (June 18, 2012):

Completion is the sine qua non of gift taxation. A grantor's retained control over transferred property (intentionally or unintentionally) may cause a gift to be incomplete for gift tax purposes. This is true even if the grantor has no beneficial interest in transferred property. Powers that typically cause completion problems are discretionary powers over income or principal, and the ability to add or delete trust beneficiaries. Completion problems can be avoided, however, if the grantor’s power is limited by an ascertainable standard or if the power is subject to the consent of another party having a substantial and adverse interest in the transferred property.

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