Monday, January 19, 2015

No Private Letter Rulings in These Estate Planning Areas

Taxpayers who have questions about the applicability of tax law can submit a Private Letter Ruling request to the IRS. If the IRS rules, then the taxpayer can rely on the ruling as to how the law applies to their situation (although other taxpayers may not rely on the ruling). In recent years, the cost of applying has become very expensive. Nonetheless, under the right circumstances, a Private Letter Ruling can provide value and important guidance to taxpayers.

The IRS publishes a list annually of items that they will not rule on. This year, the IRS added two new estate planning issues to the list. These new additions are rulings on:

  1. Actuarial factors for valuing interests in the prospective gross estate of a living person; and
  2. Classification for Federal tax purposes of a fideicomiso or other land trust created under local law, applying the principles of Rev. Rul. 2013-14, 2013-26 I.R.B. 1267 (relating to whether certain Mexican land trusts should be characterized as a trust under the Internal Revenue Code), or Rev. Rul. 92-105, 1992-2 C.B. 204 (relating to whether a taxpayer's interests in an Illinois land trust qualified as real property for purposes of a Section 1031 exchange).

Thus, taxpayers with questions in this area will not be able to receive the benefit of a Private Letter Ruling.

Rev Proc 2015-3, 2015-1 IRB 129 (Jan. 2, 2015)

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