PORTFOLIO

Gross Estate — Section 2033 (Portfolio 817)

Tax Management Portfolio, Gross Estate — Section 2033, No. 817-3rd, is a fundamental building block for estate planners as it addresses the question of which interests in property are includible in a decedent's gross estate.

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DESCRIPTION

Tax Management Portfolio, Gross Estate — Section 2033, No. 817-3rd, is a fundamental building block for estate planners as it addresses the question of which interests in property are includible in a decedent's gross estate. This question is to be distinguished from questions of valuation, at which §2031 is directed, although the two questions are often intertwined. The §2033 issues are primarily theoretical or analytical in nature, and often the question of whether and to what extent §2033 applies will depend on the theoretical rationale of the estate tax.
The §2033 issues include problems relating to the instant before death, the instant of death, and the instant after death. Interests that expire before death, such as life estates, are not includible in the gross estate under §2033, nor are interests that do not come into existence until after death, such as proceeds of wrongful death actions. This portfolio also deals with certain exemptions from the gross estate which originated outside of §2033, such as exemptions for property belonging to Native Americans and Housing Project Notes.
This portfolio may be cited as Loomis-Price, 817-3rd T.M., Gross Estate — Section 2033.


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AUTHORS

STEPHANIE LOOMIS-PRICE, ESQ.
Stephanie Loomis-Price, B.A. (International Studies and Spanish, with honors) Austin College (1989); M.S. (Applied Behavioral Science), Johns Hopkins University (1996); J.D., cum laude, Georgetown University Law Center (1998); member, State Bar of Texas; admitted to practice before the US Tax Court, US Court of Federal Claims, U.S. District Court for the Southern District of Texas, U.S. Courts of Appeals for the Fifth, Eighth and Eleventh Circuits.
Board Certified in Estate Planning and Probate Law. Fellow, American College of Trust and Estate Counsel; Council, American Bar Association Section of Real Property, Trust and Estate Law.

TABLE OF CONTENTS

 

Detailed Analysis

I. Introduction

A. Concept of "Gross Estate"

B. Origin and Scope of § 2033

1. History

2. Section 2033 Contrasted and Compared with Other Inclusionary Sections

3. Section 2033 and the Grantor Trust Rules

4. Applicability of § 2033 and One or More Other Inclusionary Sections

5. Valuation

II. Elements of § 2033

Introductory Material

A. Did the Decedent Have an "Interest" in "Property"?

1. Introduction

2. "Property"

a. Real Property

b. Tangible Personal Property

c. Intangibles

(1) Stocks and Bonds

(2) Promissory Notes

(3) Causes of Action and Claims

(4) Accrued Dividends

(5) Accrued Interest

(6) Rents

(7) Earned but Unpaid Fees or Commissions

(8) Deferred Compensation and Bonuses

(9) Tax Refunds

(10) Bank Accounts

(11) Insurance on the Life of Another

(12) Interest-Free Loans

(13) Stock and Commodity Contracts

(a) Futures Contracts

(b) Stock Options

(c) Short Sales

(14) Contributions to § 529 Plans and Other Qualified Tuition Programs

(15) Contributions to Coverdell Education Savings Accounts

(16) Use of Deceased Author's Name

(17) Section 1341(a) Relief

(18) Community Property

(19) Individual Retirement Accounts

d. Trust Property

3. "Interest" in Property

a. Beneficial vs. Bare Legal

b. Present vs. Future

(1) Life Estates

(2) Reversions

(3) Remainders

c. Vested vs. Contingent vs. Defeasible

d. Legal vs. Illegal

4. What Law Applies?

a. Law of Another Country

b. U.S. Law

c. The Bosch Case

d. Examples

B. "At the Time of His Death"

1. Introduction

2. Restrictions

3. Retroactivity and Subdivision

4. Disclaimers

5. Simultaneous Deaths

a. Probate Property

b. Jointly Held Property

c. Life Insurance

6. Compensation Paid After Death

a. Enforceability

b. Right to Receive Benefits on Death

c. Summary Comments

7. Powers of Appointment

8. Advances

9. Contingent Fees and Commissions

10. Split Gifts: Gift Tax as an Asset

a. Federal Gift Tax

b. State Gift Tax

11. Property Arising After Death

a. Wrongful Death Recoveries

(1) Death Statutes

(2) Survival Statutes

(3) Pain and Suffering

b. Other Interests

(1) Social Security

(2) Railroad Retirement Act

(3) Public Safety Officers' Benefits Act

(4) State Workmen's Compensation Benefits

(5) Federal Coal Mine Health and Safety Act of 1969

(6) Payments Connected with Military Service

(7) Miscellaneous

III. Section 2034: Dower, Curtesy and Homestead Rights

IV. Miscellaneous

A. Property Subject to Contract

1. Decedent as Seller

2. Decedent as Purchaser

B. Transfers Completed Before Death

C. Title to Property

D. Partnerships

E. Other Special Situations

1. Proceeds of Corporate-Owned Insurance on the Life of the Controlling Shareholder

2. U.S. Veterans

3. Family Estate

4. Murder of Joint Tenant

5. Excess Campaign Funds

V. Application of the Estate Tax to U.S. Citizens and Residents

A. U.S. Citizens and Residents

B. Residents of Possessions

C. Situs of Property

D. Treaties and Conventions

E. Expatriation to Avoid Tax

VI. Exclusions from Gross Estate

A. Land Subject to Qualified Conservation Easement

1. Land Qualifying for Exclusion

2. Maximum Benefit Allowed

3. Coordination with Other Estate Tax Provisions

B. Native Americans' Property

1. General Allotment Act of 1887

2. Unique Status of the Osage Tribe

3. Alaskan Native Claims Settlement Act

4. Other Provisions Relating to Exemption of Native Americans' Property

a. Agua Caliente Band of Mission Indians

b. Klamath Indian Tribe

c. Chicasaw Indian Tribe

C. Cemetery Lots

D. Public Housing Bonds and Notes


WORKING PAPERS

Working Papers

Table of Worksheets

Worksheet 1 Text of § 2033: Property in Which the Decedent Had an Interest

Worksheet 2 Excerpts from the Legislative History of the Revenue Act of 1962, P.L. 87-834

Worksheet 3 Property Subject to § 2033

Bibliography

OFFICIAL

Statutes:

Legislative History:

Treasury Regulations:

Treasury Rulings:

Cases:

UNOFFICIAL

Treatises:

Periodicals:

Pre-1987

1987

1988

1989

1993

1997

1998

1999

2000

2001

2002