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No Gain at Death 2010-02-01 (1)No Gain at Death 2010-02-01 (1)

Even the Internal Revenue Service has now informally agreed: death does not trigger gain.

14 Min Read
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Mitchell M. Gans & Jonathan G. Blattmachr

In a 2002 article,1 we examined at length the income-tax effects of the termination of a grantor trust by reason of the death of the grantor in the context of an installment sale.2 Acknowledging then that the law was unsettled, we considered the plausibility of various approaches. Still, we reached firm conclusions about two critical issues: first, that gain is not recognized at the time of the grantor's death; and second, that the income in respect of a decedent (IRD) regime, largely contained in Internal Revenue Code Section 691, cannot apply.

We continue to believe that these conclusions are correct.

No Gain at Death

We start by noting that even the Internal Revenue Service has now informally agre...

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About the Authors

Mitchell M. Gans

Mitchell M. Gans is a Rivkin Radler Distinguished Professor of Law at Hofstra University in Hempstead, New York. Before joining the Hofstra faculty, Professor Gans had been an associate in the Tax and Trust and Estates Departments at the New York City law firm of Simpson, Thacher & Bartlett and law clerk to Associate Judge Jacob D. Fuchsberg, New York State Court of Appeals. He is an Academic Fellow at the American College of Trust and Estate Counsel. He is also an Adjunct Professor of Law at the NYU School of Law.

Professor Gans is a leading scholar in the estate-and-gift tax area. He is a frequent lecturer for ALI-ABA, NYU, the American College of Trust and Estate Counsel, the ABA and other groups. He currently serves on an advisory committee to the New York State legislature that is studying the revision of trust law in New York. Professor Gans has published articles in the Boston University Law Review, Emory Law Journal, University of Georgia Law Review, Notre Dame Law Review, Virginia Tax Review, Florida Tax Review and Tax Notes, among others. He is also the co-author of a book on the ethical obligations the Treasury imposes on tax practitioners.

 

Jonathan G. Blattmachr

Principal, ILS Management, LLC

 

Mr. Blattmachr is a Principal in ILS Management, LLC and a retired member of Milbank Tweed Hadley & McCloy LLP in New York, NY and of the Alaska, California and New York Bars. He is recognized as one of the most creative trusts and estates lawyers in the country and is listed in The Best Lawyers in America. He has written and lectured extensively on estate and trust taxation and charitable giving.

Mr. Blattmachr graduated from Columbia University School of Law cum laude, where he was recognized as a Harlan Fiske Stone Scholar, and received his A.B. degree from Bucknell University, majoring in mathematics. He has served as a lecturer-in-law of the Columbia University School of Law and is an Adjunct Professor of Law at New York University Law School in its Masters in Tax Program (LLM). He is a former chairperson of the Trusts & Estates Law Section of the New York State Bar Association and of several committees of the American Bar Association. Mr. Blattmachr is a Fellow and a former Regent of the American College of Trust and Estate Counsel and past chair of its Estate and Gift Tax Committee. He is author or co-author of five books and more than 400 articles on estate planning and tax topics.

Among professional activities, which are too numerous to list, Mr. Blattmachr has served as an Advisor on The American Law Institute, Restatement of the Law, Trusts 3rd; and as a Fellow of The New York Bar Foundation and a member of the American Bar Foundation.

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