Chair: Nolan A. Moullé III, The Northern Trust Company, Houston, TX
Mr. Garcia and Ms. Soliman will review current developments in fiduciary income tax. Ms. Hughes will update the committee on developments within the Treasury and the Service.
Panelists: Francisco Garcia Jr., Henderson Caverly & Pum LLP, San Diego, CA; Anna Soliman, Fiduciary Trust Company International, Los Angeles, CA; Catherine V. Hughes, Office of Tax Policy, Department of Treasury, Washington, DC
A Refresher on the Throwback Tax.
Mr. Moullé will discuss the application of the throwback tax to foreign trusts.
Panelist: Nolan A. Moullé III, The Northern Trust Company, Houston, TX
9:45am Trust & Estate Distributions to Foreign Beneficiaries. Mr. Strohmeyer will discuss the income tax consequences and reporting requirements when domestic trusts and estates make distributions to foreign beneficiaries.
Panelist: John R. Strohmeyer, Strohmeyer Law PLLC, Houston, TX
Can an AFR Loan be Treated as Not Issued for Full and Adequate Consideration if Later Valued in the Note Holder’s Gross Estate at a Discount?
Under section 7872, if a promissory note provides for adequate stated interest, there is no gift when issued. If the note is later gifted or included in the note holder’s gross estate and is valued at a discount for transfer tax purposes, it should follow that the note was issued for full and adequate consideration. The IRS position is that if later valuing the note at a substantial discount, there was not a transfer for full and adequate consideration so that the trust that borrowed the funds is exposed to sections 2036(a)(2) and 2038. Professor Hesch and Mr. Strauss will first review the history of section 7872 and the factors used in valuing promissory notes, and then address how these principles should be applied to loans made in compliance with the loan regime split dollar regulations.
Panelists: Professor Jerome “Jerry” Hesch, Florida International University Law School, Miami, FL; Michael Strauss, Strauss Malk & Feder LLP, Northbrook, IL