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IRS relief for missed allocations of GST exemption.

In Rev. Proc. 2004-46, the Service issued guidance allowing taxpayers to apply for relief for missed allocations of the generation-skipping transfer (GST) tax exemption in a simplified format, under certain limited circumstances and if certain conditions are met. Generally, the relief applies to transfers that occurred before 2001 and were within the gift tax annual exclusion amount. The simplified format allows the taxpayer to file Form 709, United Stales Gift (and Generation-Skipping Transfer) Tax Return, for the year in question (whether or not that form was previously filed for that year) and attach a notice of allocation showing the relief requested.

Many situations involving girls to irrevocable life insurance trusts may meet the procedure's restrictions. In contemplating the new procedure, tax advisors should be looking for trusts (e.g., life insurance trusts) that were overlooked for GST purposes, yet are intended to benefit multiple generations and receive annual exclusion gifts each year.

The AICPA Tax Division's Trust, Estate, and Gift Tax Technical Resource

Panel's GST Regs Task Force asked the IRS for this relief. See /GST_Safe_Harbor.htm.

Prop. Regs. on Electing Out

The IRS also issued proposed regulations (REG-153841-02, 7/13/04) on electing out of the deemed GST allocation under Sec. 2632(c)(1) for certain transfers to a GST trust. The proposed rules also provide guidance for making the election to treat a trust as a GST trust. If you have any comments or concerns about the proposed regulations, please contact Eileen Sherr at

Eileen Sherr, Technical Manager
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Title Annotation:generation skilling transfer tax
Author:Sherr, Eileen
Publication:The Tax Adviser
Date:Oct 1, 2004
Previous Article:Final version of Schedule M-3 available.
Next Article:Electing to defer advance payments under Rev. Proc. 2004-34.

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