ACTEC Law Journal


Whether a transfer of property is subject to generation-skipping transfer ("GST") tax depends in part on the identity of the individual who is considered the "transferor." Yet a deep uncertainty as to the identity of the transferor may arise when a beneficiary of a trust assigns his or her beneficial interest to another. Taxpayers, commentators, and the Internal Revenue Service have proposed three possible theories for resolving the question of who is the transferor in those circumstances. A careful analysis of relevant authorities reveals that only one of these theories -- namely, that an assignment of a beneficial interest has no effect on the identity of the transferor of the underlying trust property -- is correct, while the others are not only technically misguided but, in some cases, threaten to undermine the very integrity of the GST tax. The Internal Revenue Service can and should resolve the dueling transferors problem by issuing a public ruling setting forth the correct analysis.



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