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No Gain at Death 2010-02-01 (2)No Gain at Death 2010-02-01 (2)
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
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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