Allocation of GST exemption.
Application of the GST exemption using date of gift values requires the allocation be made on a timely filed gift tax return (excluding extensions). Sometimes the donor wishes to apply the exemption on a formula basis, depending on the final outcome if the IRS disputes the gift property's FMV. The Service has not provided guidance in proposed regulations or otherwise for the mechanics of the allocation. Tax advisers should note that completion of the gift return, Form 709, Schedule C, Part II, does not constitute an allocation of the exemption but merely reconciles the remaining GST exemption.
A separate notice of allocation of the GST exemption should be attached to the return. If a formula allocation is desired, the notice should refer to the allocation of the donor's GST exemption remaining as is necessary to produce an inclusion ratio closest to or if possible equal to zero for each of the gifts (usually by naming the generation-skipping trust). Automatic allocation rules apply to direct skip gifts and bequests. From Gary N. Cohen, Esq., Washington, D.C,
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|Title Annotation:||generation-skipping transfer|
|Author:||Cohen, Gary N.|
|Publication:||The Tax Adviser|
|Article Type:||Brief Article|
|Date:||Jan 1, 1993|
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