Re: 3-year Rule

From: "Steve Foulks" <steve_foulks@up.bresnan.net>
Subject: Re: 3-year Rule
Date: Sat, 5 Sep 1998 01:55:17 -0400

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>From: "Harold R. Justice" <hjustice@concentric.net>
>Subject:
>
>I have been told anyone can give anyone else up to $10,000 per year with no
gift or
>estate tax consequenses. However, the accountant doing my father-in-law's
estate tax
>forms says  any gift, even if it is under $10,000, that was given within 3
years of
>death, must be included in the gross estate. Is this correct. Please site
an IRS
>publication to support your answer.
>
>Thanks,
>
>Harold

You accountant is behind the times.  The rule he described ended on
12/31/76.  I have included the IRC code section where the issues are
discussed, in parenthesis

You only have to include the gift taxes paid on gifts made within 3 years of
death, and
as an exception, you DO HAVE TO INCLUDE the FMV of the following types of
property, gifted within 3 years of death (Sec 2035):

- - - transfers with a retained life estate (Sec 2036)
- -- transfers taking effect at death (sec 2037)
- -- revocable transfers (Sec 2038)
- -- gifts of life insurance (Sec 2042)
Steven M. Foulks, CPA, CFP, PhD
<http://www-instruct.nmu.edu/business/sfoulks/>

Northern Michigan University <http://www.nmu.edu/home.shtml>



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