Re: 3-year Rule

From: Kent Shaw <kshaw@erols.com>
Subject: Re: 3-year Rule
Date: Sat, 05 Sep 1998 17:51:14 -0400

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>
>Date: Tue, 01 Sep 1998 18:17:53 -0500
>From: "Harold R. Justice" <hjustice@concentric.net>
>Subject: 3-year Rule
>
>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
>
The following information is not intended as tax advice.  For tax advice,
consult with your accountant who knows your personal situation better than I:

Prior to January 1, 1977, gifts made within three years prior to death were
includable in the estate if they were made "in contemplation of death".
That was refutable if you could show that the donor was in good health at
the time of the gift and was not advised of any terminal illness by a
physician.  The idea was to prevent someone who had been advised of a
terminal illness from giving portions of the estate away as a tax dodge.

Gifts made within three years of death by donors who die after 1981 are
generally not brough back into the donor's gross estate under the bringback
rule of IRC Section 2035.  There are exeptions to this rule and the rules
are not always simple.  Ask your accountant to show you why the gifts are
being included.  If you are not confident in your accountants ability, you
may wish to contact one of the larger accounting firms who generally are
staffed with experts in gift taxes and estates--including tax attorneys.






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