§2038 — Revocable transfers
65 cases·11 followed·18 distinguished·9 questioned·1 overruled·26 cited—17% support
Statute Text — 26 U.S.C. §2038
The value of the gross estate shall include the value of all property—
To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished during the 3 year period ending on the date of the decedent’s death.
To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power during the 3 year period ending on the date of the decedent’s death. Except in the case of transfers made after June 22, 1936, no interest of the decedent of which he has made a transfer shall be included in the gross estate under paragraph (1) unless it is includible under this paragraph.
For purposes of this section, the power to alter, amend, revoke, or terminate shall be considered to exist on the date of the decedent’s death even though the exercise of the power is subject to a precedent giving of notice or even though the alteration, amendment, revocation, or termination takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent’s death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interests which would have been excluded from the power if the decedent had lived, and for such purpose, if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §20.2038-1 Revocable transfers
- Treas. Reg. §Treas. Reg. §20.2038-1(a) In general.
- Treas. Reg. §Treas. Reg. §20.2038-1(b) Date of existence of power.
- Treas. Reg. §Treas. Reg. §20.2038-1(c) Transfers made before June 23, 1936.
- Treas. Reg. §Treas. Reg. §20.2038-1(d) Transfers made before June 2, 1924.
- Treas. Reg. §Treas. Reg. §20.2038-1(e) Powers relinquished in contemplation of death—(1) In general.
- Treas. Reg. §Treas. Reg. §20.2038-1(f) Effect of disability to relinquish power in certain cases.
65 Citing Cases
29 Section 2038 also includes an exception for a “bona fide sale for an adequate and full consideration in money or money’s worth.” We need not decide whether this exception applies here.
Nor does the estate challenge respondent's assertion that decedent's transfer ofcash and securities to the partnership was "not a bona fide sale for an 4Because we express no view on whether the transfer ofdecedent's cash and securities to NHP was subject to a right described in sec.
Nor does the estate challenge respondent's assertion that decedent's transfer ofcash and securities to the partnership was "not a bona fide sale for an 4Because we express no view on whether the transfer ofdecedent's cash and securities to NHP was subject to a right described in sec.
2 In light of this holding, we need not decide whether, as respondent contends, (1) the assets transferred to the partnership are included in decedent's gross estate under sec.
THE VALUE OF THE ASSETS TRANSFERRED TO THE TRUSTEE DURING THE LIFETIME OF THE DECEDENT HAVE BEEN REPORTED, PURSUANT TO SECTION 2038 OF THE INTERNAL REVENUE CODE, ON SCHEDULE G * * *.
Respondent argues in the alternative that section 2038 requires inclusion in the value of the gross estate of the values of the assets transferred into the partnerships .
(b) The New Jersey Litigation The Superior Court ofNew Jersey, unlike the Indiana arbitrator, specifically found that decedent "made valid, irrevocable, gifts in December 2001 and January, 2002 ofall his capital shares ofthe LLC to his nieces." (Emphasis supplied.) Petitioner attempts to sidestep that finding by arguing that that "determination of state property interests does not and cannot foreclose consideration ofthe appropriate federal tax treatment." Petitioner argues that seätions 2035 an
d not constitute adequate consideration because they were structured to ensure that no annuity payment would be made and there was no real expectation ofpayment. "The parties also dispute whether the annuity transaction was bona fide for purposes ofsec. 2038. Sec. 2038 includes in a decedent's gross estate an inter vivos propertytransfer, other than a transfer by a bona fide sale for adequate and full consideration, within the three-yearperiod ending on the date ofthe decedent's death. The annui
Section 2038(a)(1) In order to resolve the parties' dispute nder section 2038 (a) (1) ,70 we must consider the following factual issue s (1) with respect to Ms .
Like section 2036, section 2038 provides for inclusion in the gross estate of the value of transferred property.
1174 (9th Cir. 1986). - 11 - We do not agree with respondent’s original assertion that, after the transfer of the properties, decedent retained the power to revoke the transfer, thus requiring the inclusion of their value in his gross estate under section 2038. The documents in evidence do not show that decedent retained such a power. Nor does the evidence support a finding that in executing the transfer Michael violated his duties as a trustee, thus rendering the transfer revocable by operatio
In the alternative, respondent contends that voidable transfers are includable in the gross estate pursuant to section 2038, which governs revocable transfers.
cs. 2036(a)(2) and 2038(a)(1). Because we hold that the property transferred to the partnership is included in decedent’s estate under sec. 2036(a)(1), we need not decide whether the property is included in decedent’s estate under sec. 2036(a)(2) or sec. 2038. - 3 - FINDINGS OF FACT Some of the facts have been stipulated and are so found. A. Decedent, Her Family, and Decedent’s Estate Decedent died testate on August 8, 1997, at the age of 88. She resided in Alhambra, California, at that time. De
itioner’s motion to shift the burden of proof regarding those theories is moot. In light of this holding, we need not decide whether, as respondent contends, (1) the assets transferred to the partnership are included in decedent’s gross estate under sec. 2038, (2) any “applicable restriction” in the partnership agreement is disregarded under sec. 2704(b), (3) lapsed liquidation rights are included in decedent’s gross estate under sec. 2704(a), or (4) decedent did not make another gift to his chi
2008-74, we framed section 2038 as pulling transferred property back into a decedent's estate if: (1) the decedent made an inter vivos transfer of property; (2) the decedent's transfer was not a bona fide sale for adequate and full consideration; and (3) the decedent kept an interest or right in the transferred property of the kind listed in section 2038 (a) which sh
- 2 - attorney-in-fact are includable in decedent’s gross estate under section 2038.2 Resolution of the issue requires us to decide whether decedent’s attorney-in-fact was authorized to make the gifts in question by certain powers of attorney granted to her by decedent.
The issues for decision are: (1) Whether certain partnership interests - 2 - includable in the gross estate pursuant to section 2044 should be merged or aggregated with the partnership interests includable in the gross estate pursuant to section 2038, for valuation purposes; and (2) whether the interests in two partnerships passing at death should be valued for Federal estate tax purposes as "assignee" interests or as partnership interests.
In general, section 2038 includes transferred property in a decedent's gross estate if: (1) the decedent made an inter vivos transfer ofproperty; (2) the - 11 - [*11] decedent's transfer was not a bona fide sale for adequate and full consideration; and (3) the decedent kept an interest or right in the transferred property ofthe kind listed in section 2038(a)
e decedent's death. In Estate ofJalkut v. Commissioner, 96 T.C. 675, 685 (1991), this Court analyzed whether either oftwo sets oftransfers constituted a relinquishment by the decedent ofhis power to alter, amend, revoke, or terminate the trust under section 2038. In 1984 decedent Jalkut, as trustee, made gift transfers to six donees. Id. The Court concluded that the decedent made these transfers pursuant to his power to withdraw income and principal from the trust and therefore the gift transfer
cedure. - 3 - After concessions,2 the issues presented are:3 2In the estate tax notice of deficiency, respondent determined that the value of a $250,000 St. Francis Hospital, Inc. bond was includable in Sylvia Gore’s (decedent’s) gross estate under sec. 2038, or, alternatively, under either sec. 2031 or 2033. In the stipulation of facts, petitioner concedes that the bond is includable in decedent’s gross estate. In the estate tax notice of deficiency, respondent disallowed a deduction of $19,084
cedure. - 3 - After concessions,2 the issues presented are:3 2In the estate tax notice of deficiency, respondent determined that the value of a $250,000 St. Francis Hospital, Inc. bond was includable in Sylvia Gore’s (decedent’s) gross estate under sec. 2038, or, alternatively, under either sec. 2031 or 2033. In the stipulation of facts, petitioner concedes that the bond is includable in decedent’s gross estate. In the estate tax notice of deficiency, respondent disallowed a deduction of $19,084
Among these specific sections are section 2036, which includes transfers where the decedent retained the possession of, the enjoyment of, or the right to designate persons who shall possess or enjoy transferred property or income therefrom; section 2038, which includes revocable transfers; and section 2041, which includes property over which the decedent held a general power of appointment.
Among these specific sections are section 2036, which includes transfers where the decedent retained the possession of, the enjoyment of, or the right to designate persons who shall possess or enjoy transferred property or income therefrom; section 2038, which includes revocable transfers; and section 2041, which includes property over which the decedent held a general power of appointment.