Gifts That Attract the IRS' Attention

There are a number of estates facing all manners of problems with the IRS as a result of giving out "gifts" without filing them with the revenue service. Due to this, the estates have turned to the U.S. tax Court and filed several lawsuits, challenging the demands by the IRS to have the executors of the estates make further payments to the tunes of millions. The owners of these estates died, and the events that followed that death including power struggle for control of the estates have led to these lawsuits by the IRS.

The sizes of the contentious estates always play a major role in the litigation issues, which is common in cases that involve dead people. However, matters become more complicated when the power struggles that follow the control of the estate, especially because claims of embezzlement of funds, and manipulation of the wills by the beneficiaries, take center stage. Another thing that complicates the litigation processes is intentions of the estate beneficiaries to reduce donations to charitable organizations.

The result is, that the Feds and the estate beneficiaries come up with conflicting values of what the estate is worth with the fed's valuation being almost always more than twice the valuation presented by beneficiaries. The matter is sometimes complicated further by the fact that the valuations, done by both the Feds and the beneficiaries, fall on either side of the valuations made public, months before the death of the estate owners, when the power struggles over their estates' control unfold in a court of law.

In almost all the legal cases, the estate administrators claim that their valuation is significantly lower than the quotations made by the Feds because of charitable donations, but the Feds contest this as they claim that most of the donations in question are uncertain and as a result, ineligible for use in tax avoidance or reduction purposes.

Many estate administrators embroiled in legal tussles acknowledge that they did not file majority of the required federal gift-tax returns, which gives the IRS the right to demand for more taxes, including penalties for filing failure. The Feds also claim that most deceased estate owners when alive gave away gifts which are not currently included in their estates. Most of these gifts were subsequently transferred to the current estate and form the basis for court cases. Majority of the lawsuits that the U.S. tax court is handling touch on gift taxes that the estates owners have evaded.

Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. http://www.limonwhitaker.com Tel:888.321.6188

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