I thought this was pretty ho-hum, the IRS just stating what has been
known for years. But then I read this article:

https://www.forbes.com/sites/alangassman/2023/04/07/revenue-ruling-2023-2-got-it-wrong-the-casse-for-a-stepped-up-basis-when-the-grantor-dies/?sh=234585da5d1a

I still think these people are grasping at straws, especially since the
Revenue Ruling cited a couple court decisions as to what "property
acquired from a decedent" means.

I am curious as to your thoughts.

Even more interesting is this:

"If and when the Tax Court, the Court of Claims, and/or an appellate
court agree with the position that a step-up in basis has occurred on
the death of a Grantor, then tax practitioners and their clients will
question whether the best advice was to not take the step-up, or to take
the step-up and advise the IRS in the conventional manner available of
the position taken. Many taxpayers will file an income tax return and
pay the tax as if no step-up occurred, and then file an amended return
with prominent disclosure to reduce or eliminate the IRS's ability to
impose negligence and substantial understatement penalties. "


If an amended return is filed in order to assert there was a step up in
basis and the IRS denies that position, is there a time limit for future recovery in the event a court later holds that position was indeed correct?

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Taxed and Spent <[email protected]> wrote:

I thought this was pretty ho-hum, the IRS just stating what has
been known for years. But then I read this article:

https://www.forbes.com/sites/alangassman/2023/04/07/revenue-ruling- 2023-2-got-it-wrong-the-casse-for-a-stepped-up-basis-when-the-grant or-dies/?sh=234585da5d1a

I still think these people are grasping at straws, especially
since the Revenue Ruling cited a couple court decisions as to what
"property acquired from a decedent" means.

I am curious as to your thoughts.

Even more interesting is this:

"If and when the Tax Court, the Court of Claims, and/or an
appellate court agree with the position that a step-up in basis
has occurred on the death of a Grantor, then tax practitioners and
their clients will question whether the best advice was to not
take the step-up, or to take the step-up and advise the IRS in the conventional manner available of the position taken. Many
taxpayers will file an income tax return and pay the tax as if no
step-up occurred, and then file an amended return with prominent
disclosure to reduce or eliminate the IRS's ability to impose
negligence and substantial understatement penalties. "

If an amended return is filed in order to assert there was a step
up in basis and the IRS denies that position, is there a time
limit for future recovery in the event a court later holds that
position was indeed correct?

I've looked at section 1014. It says that there's a step up in
basis only for situations specified in the statute. Among other
things it says that there's a step-up in basis for a grantor trust as
long as the assets of the trust are included in the grantor's estate
for estate tax purposes. A grantor trust that's not included in the
grantor's estate is not one of the things listed.

There is at least one situation that can get a step-up in basis for
assets that are not included in the grantor's estate, but this is not
among them.

I once worked for a lawyer who told a client that he should take a
specific tax deduction. He told the client that there was a
reasonable legal basis for taking the deduction, but if it went to
court they would probably lose. That lawyer was indicted for tax
fraud.


--
Stu
http://DownToEarthLawyer.com


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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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