This course discusses important recent cases on how to satisfy the adequate disclosure requirements for gift tax returns, when transactions between shareholders and corporations constitute constructive dividends, and transferee liability for the estate tax that may now be imposed on beneficiaries automatically when they receive a bequest.

This course will discuss clarification of standards for gift tax return adequate disclosure (case of first impression for Tax Court) and review how this informs return preparation and planning for defined value formula transactions. Cases on constructive dividends include rental arrangements, reasonable compensation, and compensation for owner guarantees of corporation obligations. Transferee liability normally required a fraudulent (voidable) transfer under state law as well as a finding of federal liability, but a split decision of the Ninth Circuit ruled that no such finding is required regarding unpaid estate tax when distributions of bequeathed property are made to beneficiaries—no matter how far down the line they are. The presenter will also discuss the strategic implications if such a rule applies to your clients.

Learning Objectives:

• Identify how to satisfy the adequate disclosure requirements for gift tax returns, including disclosure strategies


• Determine what a constructive dividend is and when transactions between shareholders and corporations constitute constructive dividends


• Summarize pitfalls to avoid and strategies to use when an owner rents to a corporation


• Evaluate Code §6166 regarding deferred estate tax liability and beneficiary exposure under Paulson—including strategies for dealing with that exposure