A Major Win for Gift Tax Valuation

A recent tax court decision, Wandry v. Commissioner, T.C. Memo 2012-88, found that a gift can be made indicating an amount of assets rather than what the assets are.  The taxpayers made a gift to their children and grandchildren in an LLC based on a specific dollar amount rather than a percentage of the LLC.  Although this may not sound like much of a difference, there is an important distinction between the two.  Simplistically, what it accomplished is that if the IRS was able to challenge and change the valuation of the percentage of the LLC gifted, the percentage would change and the taxpayer would not incur any additional gift tax exposure.  This means that regardless of the eventual findings, the IRS could not collect additional taxes. Continue reading