IRS Challenge to Installment Sales With Grantor Trusts Fuels Concerns

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March 13 — A March 16 U.S. Tax Court trial was expected to tell wealth planners whether the IRS would be allowed to make a high-profile challenge of installment sales to grantor trusts that are facilitated by promissory notes.

But a motion for continuance in Estate of Donald Woelbing v. Commissioner and Estate of Marion Woelbing v. Commissioner has been granted, and the parties may be working on a settlement. No new court date has been set (20 DTR K-1, 1/30/14).

The cases were expected to be heard in U.S. Tax Court in Milwaukee, and would establish whether heirs of Carmex lip balm magnate Alfred Woelbing would be forced to pay $32 million in gift taxes on each of two estates resulting from the transfer of nonvoting stock to a grantor trust.