Kite: IRS Wins QTIP Battle But Loses Annuity War
7 Pages Posted: 12 Dec 2013 Last revised: 30 May 2014
Date Written: December 9, 2013
In Kite, the Tax Court held that a 10-year deferred annuity constituted adequate and full consideration for a transfer of family partnership interests, even though the transferor died before receiving any payments. The court also held that the liquidation of a qualified terminable interest property trust and subsequent sale of its assets constituted a disposition of the qualifying income interest for life, resulting in a deemed transfer of the entire trust under section 2519. Ryan discusses those holdings and two more issues that were not raised in the Tax Court proceeding but are clearly implicated by the Kite facts.
Keywords: estate tax, gift tax, annuity, deferred annuity, QTIP, Kite, marital deduction, 1014, income tax, basis
JEL Classification: H2,K34
Suggested Citation: Suggested Citation