The Meaning of 'Value' for Gift and Estate Tax Donee Limitations in Tax Code 26 U.S.C. § 6324(B): An Amicus Brief for Marshall v. Commissioner
33 Pages Posted: 10 May 2013 Last revised: 14 May 2014
Date Written: August 12, 2013
In 1995, J. Howard Marshall II made a gift to Elaine Marshall worth some $43 million at the time of transfer. The IRS assessed gift tax against his estate, which failed to pay. In 2008 the IRS assessed gift tax of $74 million against donee Elaine Marshall, which exceeds $43 million because of the interest accumulated since 1995 but is less than the $81 million the gift would compound to at 5% per year. Does the limitation on donee liability to “the value” of the gift imposed by 26 U.S.C. § 6324(b) mean to “the original amount of the gift”, or to “the value of the gift at the time of eventual tax payment”? The appellate courts are split on this. That is the issue in Marshall v. Commissioner, which is now before the 5th Circuit. This paper is an amicus brief in that case and, I hope, a good example of how economics can inform and simplify law.
Keywords: present discounted value, value theory, tax law, joint and several liability, gift tax, estate tax
JEL Classification: A20, H24, K34, K42
Suggested Citation: Suggested Citation